What kind of revolution will the bitget investment in BC technology bring to the Web3 market?

What Revolution Will Bitget's Investment in BC Technology Bring to the Web3 Market?

OSL’s parent company receives strategic investment of HKD 700 million from BGX, intensifying competition in the Hong Kong cryptocurrency exchange market

The long-standing rumors of OSL’s sale have finally materialized. Recently, BC Technology Group, the parent company of OSL, received a strategic investment of HKD 710 million from BGX, with BGX poised to become the largest shareholder of BC Technology.

As a result, the virtual asset exchange market in Hong Kong may witness a new landscape.

OSL under new ownership by BGX

On November 15, after a two-day trading suspension, BC Technology Group announced the resumption of trading. Within the first half-hour of trading, its stock price plummeted by over 10%, reaching HKD 4.52 at the time of writing.

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On November 14, BC Technology Group revealed that it had secured a strategic investment of HKD 710 million from the cryptocurrency group BGX. On November 13, BC Technology announced the suspension of its stock trading pending the release of insider trading disclosure.

Judging from the stock price reaction, investors seem to have reservations about this strategic investment.

According to BC Technology’s announcement, as part of this strategic investment, BC Technology issued 187.6 million new shares to cryptocurrency investor Shawn Liu’s BGX, at HKD 3.8 per share, representing a discount of 22.76% compared to the closing price of HKD 4.92 last Friday.

BC Technology Group is a listed company in Hong Kong primarily engaged in digital asset and blockchain businesses. It owns OSL, a licensed virtual asset exchange in Hong Kong. Currently, there are only two licensed virtual asset exchanges in Hong Kong (the other being HashKey Exchange). Moreover, media reports earlier this year speculated that BC Technology would sell OSL, generating industry attention.

With this strategic investment from BGX, the rumors of OSL’s sale have finally materialized.

BC Technology CFO Hu Zhenbang told Techub News: “The BGX strategic investment strengthens our capital position. Going forward, we will continue to do what we should be doing: expanding into the institutional market, connecting more banks, securities firms, and retail investors. In addition, STOs are highly anticipated. We have already announced the joint launch of a fund product focusing on STOs with GF International, and we will promote it in the retail market in Hong Kong. Similar products will follow.”

According to media reports, after receiving the strategic investment, the shareholding of East Harvest, the majority shareholder of BC Technology, represented by industrial shell king Gao Zhenshun and Lu Jianbang, will dilute from 42.77% to 29.96%. Shawn Liu of BGX will hold a stake of 29.97% in the future, becoming the largest shareholder of BC Technology Group. Shawn Liu is the founder of mainland equity investment firm Shenzhen Qianhai Jun Chuang Fund and cryptocurrency investment institution Foresight Ventures.

BC Technology announced that Shawn Liu plans to nominate BGX & BitgetX CEO Pan Zhiyong and Yang Chao as directors of BC Technology.

Before this, on November 13, BitgetX issued a notice titled “Announcement on the Closure of BitgetX.hk,” requesting users to withdraw their virtual assets from the platform before December 13.

The announcement stated that BitgetX is giving up on applying for a virtual asset trading platform license in Hong Kong. Starting from December 13, www.BitgetX.hk will cease operations, and Bitgetx.hk will permanently exit the Hong Kong market.

The New Landscape of Cryptocurrency Exchanges

BGX’s strategic investment marks a new phase for BC Technology and OSL’s development.

Over the past two years, BC Technology has been in a state of continuous losses, and the net loss has been expanding. Due to the prolonged bear market in the cryptocurrency industry, OSL’s performance has declined. Despite obtaining a virtual asset trading platform license in August this year, OSL has not significantly expanded its business.

According to BC Technology’s 2023 interim report, the company’s net loss in the first half of 2023 was HK$94.7 million, and the total trading volume on OSL’s digital trading platform was HK$112.6 billion, a 47.5% decrease compared to the same period last year, with brokered trading volume decreasing by 42%.

However, obtaining a virtual asset trading platform license in Hong Kong requires significant investment costs. Previously, industry experts estimated initial costs of HK$30-40 million, with annual operating costs of HK$20 million.

BC Technology’s CFO, Hugh Zhenbang, also stated in an interview with Techub News that the exact investment amount by OSL is difficult to determine, but it is certainly not low.

Industry analysts believe that BGX’s entry will bring vitality to OSL and that some platforms currently applying for licenses may soon be approved. The Hong Kong cryptocurrency market is entering a phase of intense competition. Whether Hashkey, which has held an advantage, can continue to maintain innovation and rapid market development remains unpredictable.

According to public reports, Bitget is the parent company of BitgetX, established in 2018, and is one of the world’s largest cryptocurrency exchanges with over 20 million users. According to CoinMarketCap data, Bitget’s overall ranking has risen from 14th to 8th place. The spot trading volume in the past 24 hours was $1.1 billion, with a weekly visitor count of 2.12 million.

According to the Hong Kong Securities and Futures Commission’s website, there are currently 5 companies applying for virtual asset trading platform licenses, including BGE, HKbitEX, HKVAX, VDX (Victory Digital Technology), and Meex.

In addition, the Hong Kong virtual asset industry also has potential competitors such as SEBA from Switzerland, traditional securities license holders (Tiger and Futu), top platforms (OKX and Binance) and other platforms with licenses numbered 1/4/7/9.

It’s worth discussing who will become the “top player” of Hong Kong’s virtual asset exchanges in the future.

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