Osl Group raises another $200 million amid turbulence, doubling down on stablecoins

OSL Group, a provider of stablecoin trading and payment services, raised $200 million by allocating shares to Fidelity Investments.

Key points:

* OSL Group successfully raised $200 million through a share placement with Fidelity Investments. This transaction marks one of the largest publicly disclosed equity placements in crypto history, coming just six months after the company closed a $300 million funding round.

* The Hong Kong-based firm is accelerating its expansion into stablecoin-related services to meet surging market demand for such digital assets.

Author of this article: Liang Wuren

In the wild west of digital assets, stability is quickly becoming a scarce resource. $OSL GROUP (00863.HK)$Clearly capitalizing on this trend, the company is trying to demonstrate to investors that it can achieve growth by providing this 'stability.'

Last Thursday, the company providing stablecoin trading and payment servicesannouncedthat it had raised $200 million to expand its operations, including mergers and acquisitions. The funds came from Fidelity Investments, the asset management giant. According to Tracxn, Fidelity already held a significant stake in OSL prior to this financing round. This fundraising comes just six months after OSL completed a larger $300 million share placement, which was then the largest publicly disclosed equity financing deal in the crypto industry.

This relentless, aggressive pace of fundraising reflects the high-stakes land grab underway in the financial sector. With stablecoins—digital tokens tied to real-world assets like the US dollar—playing an increasingly pivotal role in the digital asset economy, their demand is surging.

First, for traders and investors, converting highly volatile cryptocurrencies into US dollar-pegged stablecoins is an essential tool for risk management and liquidity allocation. Institutional investors are increasingly adopting stablecoins, becoming a significant driving force behind their growth. According to a survey released by EY and Coinbase in March of last year, over 80% of institutions globally are either using or evaluating stablecoins.

Secondly, stablecoins are gradually becoming an important tool for cross-border payments and remittances. Through blockchain technology, stablecoins enable faster and lower-cost cross-border transactions compared to traditional banking systems, especially offering advantages in emerging markets. As a result, more and more businesses are beginning to accept stablecoins, indicating that they are progressively becoming a widely adopted payment currency in the real world.

On the regulatory front, authorities in various regions are establishing licensing systems to provide clearer guidelines for crypto-related businesses. As early as 2020, OSL became the first company licensed by the Hong Kong Securities and Futures Commission to offer regulated digital asset brokerage and automated trading services. This type of regulatory framework allows licensed companies to develop their operations within a defined system, helping enhance operational stability and market trust.

Similarly, major markets like the US and Hong Kong are accelerating legislative processes specifically targeting stablecoins, adding momentum to the growth of related digital assets. Notably, Fidelity Investments is also set to launch its own stablecoin soon.

OSL's strategic base is also located in Hong Kong, where stablecoins and other crypto services are legal businesses, while mainland China still bans such activities. This allows OSL not only to benefit from the growth of stablecoin trading in Asia but also to seize opportunities with increasing numbers of mainland Chinese companies setting up business units in Hong Kong to participate in these markets.

All this has laid a solid foundation for OSL’s growth. The company exited old businesses like advertising and campus management between 2022 and 2023, fully transitioning to the digital asset sector. In the first half of last year, as the new business gradually stabilized, OSL's revenue surged 58% year-on-year to HKD 195.4 million (approximately USD 25 million).

Over-the-counter trading services remain at the core of OSL’s business, benefiting from a 200% surge in trading volume in the first half of last year, with related revenues continuing to account for the largest share of the company’s income. However, what truly stood out was OSL Pay, a platform that converts fiat currency into stablecoins and vice versa. Launched in April of last year, it already contributed 28.6% of the company’s total revenue in the first half of last year, primarily driven by demand from the European market.

Full Expansion

As OSL Group pushes forward with its new development direction, it has entered full expansion mode. In the first half of last year, the company doubled its workforce to 568 employees. Beyond rapid scaling, OSL actively expanded through acquisitions and other means to secure operational licenses for stablecoins in different global markets, a key step in building an international client base. By the first half of last year, the company had extended its licensing footprint to several new regions, including Italy, Bermuda, and Indonesia.

At the same time, OSL has been intensively launching new products, including StableX for compliant stablecoin issuance and Tokenworks, focused on tokenizing real-world assets. Coming soon, OSL BizPay will be positioned as a platform dedicated to providing stablecoin payment services for enterprises.

Therefore, the investment logic for investors is quite clear: OSL is attempting to position itself as one of the core pillars of the regulated digital asset economy by offering more stable payment services with public infrastructure attributes, while deliberately avoiding the high volatility risks associated with most cryptocurrencies. The company’s recent intensive fundraising also indicates that investors are buying into this narrative.

OSL Chief Financial Officer Ivan Wong stated in the latest share placement announcement: 'This round of financing allows us to bring in more like-minded strategic and long-term investors. In addition to further strengthening our capital base and optimizing the shareholder structure, these funds will also help us seize opportunities to acquire licensed trading and payment institutions globally. As we advance our compliance-oriented internationalization strategy, we will further consolidate our first-mover advantage.'

The key issue at hand is whether the company can translate its massive investments into sustainable and profitable growth. In the first half of last year, as operating expenses surged significantly, losses from its continuing operations doubled year-on-year. Moreover, navigating regulatory compliance requirements across different jurisdictions and integrating newly acquired companies present considerable operational challenges. Additionally, OSL will face increasingly fierce competition, not only from agile startups but also from well-funded traditional financial institutions entering the crypto space.

Finally, there remains a significant question mark over stablecoins themselves — whether they are truly as stable as their name suggests. The earlier stablecoin TerraUSD nearly collapsed to zero within days in 2022, becoming a shocking case for the market.

The $500 million raised by OSL over the past year, though substantial, may only represent a 'down payment' in this long-term race. To deliver on its promised returns — building a scalable and profitable global payment network — will still take several years, provided the company executes effectively and stablecoins gain widespread adoption in the market.

Since the announcement of the latest financing, OSL's share price has retreated, likely due to share dilution and a significant discount on the new share placement. Even so, its price-to-sales ratio (P/S) remains around 24 times, much higher than the approximately seven times for large US cryptocurrency exchanges, $Coinbase (COIN.US)$even though the latter have notably larger revenue scales.

The appeal of stablecoins is undeniable, and OSL's strategy of betting on this type of digital asset as a growth engine is reasonable. However, without profitability to back it up, even the fastest expansion will struggle to last. This will be the core issue OSL must address in the short to medium term to continue convincing investors to believe in its stablecoin story.

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