Hong Kong Crypto Exchange Contemplates Sale at HK$1 Billion Valuation
Hong Kong’s BC Technology Group is reportedly considering the sale of its crypto platform, OSL, with a suggested valuation of approximately HK$1 billion ($128 million).
Discussions with potential buyers
That’s according to a report published by Bloomberg on Monday. OSL holds the distinction of being one of only two exchanges alongside competitor HashKey licensed under the digital asset regulations introduced by the city of Hong Kong in June. Bloomberg cited anonymous sources familiar with the matter having revealed that BC Technology has initiated discussions with potential buyers, including industry players and funds.
OSL’s platform encompasses prime brokerage, exchange services, and secure custody solutions for the cryptocurrency markets. Furthermore, OSL plays a pivotal role in facilitating financial institutions’ access to virtual asset trading. Rather than a complete sale of the company, BC Technology is considering the possibility of divesting specific parts of the business, according to these sources.
It’s important to note that these deliberations are ongoing, and there is no guarantee that they will culminate in a final deal, as highlighted by the insiders. In response to an inquiry from Bloomberg News, a representative from BC Technology stated:
“We are a highly transparent and regulated company. We do not comment on market rumors and speculations.”
Valuable trading license
OSL's regulatory licensing is likely to add considerably to its value. Earlier this year it emerged that digital asset sector firms were shelling out a range between HK$20 million and HK$200 million in their efforts to secure crypto trading licenses in Hong Kong.
In May the company obtained Type 1, 4, and 9 licensing from Hong Kong’s Securities and Futures Commission (SFC) through its OSL Asset Management (OSLAM) business. Following the acquisition of licensing, the firm moved to launch its first fund, concentrating on blockchain, artificial intelligence (AI), and Web3 technologies.
Hong Kong’s crypto hub challenges
Hong Kong enabled retail-level crypto trading on June 1, with the aim of further establishing the city as a hub for the cryptocurrency sector. The regulatory change enabled retail investors to trade larger tokens such as Bitcoin and Ethereum on licensed exchanges. Despite these efforts, demand for cryptocurrencies remains lackluster due to the lingering effects of last year’s wave of crypto sector bankruptcies.
To compound matters, Hong Kong is also grappling with the repercussions of the JPEX exchange scandal, an unlicensed Dubai-headquartered entity that further tarnished the reputation of the digital asset industry in the region.
BC Technology’s market value has shown substantial growth, surging to almost HK$1.9 billion from its low point earlier in the year. However, the company’s shares remain down by 80% from their peak in June 2021, which coincided with the cryptocurrency market’s frenzy during the pandemic.
In response to market developments, OSL has withdrawn its application for a digital asset license in Singapore and it is preparing a revised submission. It’s worth noting that certain clients from Singapore are being transitioned to the exchange in Hong Kong.
