Interview with OSL CEO Kevin: Navigating the Trends of the Crypto Compliance Era

In this interview, Colin Wu, the founder of WuBlockchain speak with Kevin Cui, the current CEO of OSL, the first company in Hong Kong to receive a virtual asset exchange license. He joined Bybit in 2021, overseeing contracts, Web3, and other departments before transitioning to the licensed exchange OSL in Hong Kong in 2024. He believes the crypto industry is entering a new phase where “compliance is key,” and OSL holds unique advantages in terms of its compliance foundation and long-term value. The strategic focus for 2025 includes advancing global licensed expansion, PayFi initiatives, and enhancing local infrastructure development.

The audio transcription is done by GPT and may contain errors. Please listen to the complete podcast:

YouTube：https://youtu.be/-C0cKTnIBRU

Spotify：https://creators.spotify.com/pod/show/7qfkmlvhrl8/episodes/EP-60--OSL-CEO-Kevin-e31397q

CEO Kevin’s Self-Introduction and Career Background

Kevin: I graduated from university with a technical background about a decade ago and began my career in product management at Google. During my entrepreneurial journey, I was involved in both product and technology. After our early startup merged with the real estate internet company Fangdd, I accompanied Fangdd through its growth until it went public. However, due to the pandemic and tightening domestic policies on real estate, the industry entered a challenging phase. By chance, I joined Bybit, where I was primarily responsible for core profitable products and business related to contracts from 2021 to 2023. By the third quarter of 2023, I transitioned to overseeing the spot business, and by the fourth quarter, I took on the Web3 segment. Essentially, I have been responsible for major businesses at Bybit, from futures to spot trading and Web3. I finally joined OSL in August 2024.

From Interest to Transformation: What Inspired Your Entry into Web3?

Kevin: I have actually been observing Web3 and the crypto industry for quite some time. Back during the early ICO days, there was a lot of excitement in Shanghai, with numerous conferences, ICO projects, and white papers. I was already very interested and kept a close eye on it.

The main reason I truly entered the industry was my interest. Even while we were still in real estate, I began to see some opportunities in Web3, such as how real estate assets could be tokenized, which has always intrigued me. Internally, we had some ideas and wanted to try to create something, but due to domestic policy restrictions, those ideas mostly remained on the fringes and could not be pushed forward. After Fangdd went public and amid the pandemic, I happened to meet the founder of Bybit, and we hit it off. Given my interest in the industry, I naturally joined. The business has a certain similarity, and many of my previous experiences were still applicable.

Why Did You Choose to Join OSL?

Kevin: After three years at Bybit, I took some time to reflect on my experiences. Those three years were filled with growth, both in terms of business scale and personal development. Bybit experienced rapid development during that time, and I felt a strong sense of achievement. From my perspective, the crypto industry has gone through several cycles, yet most efforts still seem focused on “trading” or speculation. As a practitioner, I started to see the limitations of this path. While one can still make money on offshore exchanges, what kind of innovation can come next? What breakthroughs can be achieved? These are questions I have been contemplating.

As time went on, I began to feel a clear trend toward “compliance” within the entire industry, particularly evident from the second half of 2023 to the first half of 2024, as regulatory policies and frameworks gradually took shape globally. At that time, I thought compliance might become the main theme of the next phase for the industry. I still believe that the next three years will present a completely new window of opportunity.

Thus, one of the reasons I chose to join OSL was that I recognized the solid compliance foundation and development direction it had already established. If the crypto industry is to achieve true “widespread adoption” in the future, that adoption must be built on a compliance framework. I believe this is indisputable. I think all practitioners in offshore exchanges are gradually coming to this consensus.

What Challenges Arise from the Differences Between Compliant and Offshore Exchanges?

Kevin: I think the biggest difference is regulation. If you want to ensure operations meet regulatory requirements, you need to invest a significant amount of energy, cost, and human resources, including research and development, engineering, and risk control, to build a comprehensive compliance system.

Additionally, we must spend considerable time communicating with regulatory agencies, especially when launching new businesses. This kind of communication and collaboration did not exist with offshore exchanges, as no regulatory body would get involved in discussing business matters. But now, constant communication, reporting, and coordination are essential.

Moreover, under the regulatory framework, the range of products we can offer is quite limited. It is well-known how offshore exchanges profit, whether through contracts, leverage, or frequent listings of new tokens, but these strategies are not feasible for compliant exchanges. These restrictions themselves are a challenge, which is why compliant exchanges have struggled to be profitable in recent years. I believe this is a typical phenomenon in the industry.

The Growing Pains of Licensing and Going Public: Why Has OSL’s Early Development Been Modest?

Kevin: I can only share what I know, as I am not fully aware of OSL’s early history, and some of my statements may not be entirely accurate, given that many of the stories involve facts that need verification.

To my knowledge, OSL actually started very early in this field. When I joined OSL, we visited Hong Kong’s financial sector and some clients, and we found that many had interacted with OSL years ago. Even before the regulatory license was issued in Hong Kong, OSL was already engaged in virtual asset-related business. Thus, OSL had a high level of industry recognition in the local OTC market.

Later, to obtain licenses and complete its IPO, OSL took a relatively unique route, such as through a backdoor listing. During this process, constrained by dual regulatory oversight, the company voluntarily halted many operations, including early overseas ventures in North America and Singapore. These adjustments made the company’s financial statements look unfavorable in recent years. At the same time, the company invested a lot of resources to meet regulatory requirements during the licensing process, while its original business faced transformation. These combined factors made it difficult to present an impressive annual report or business results over the past few years.

It wasn’t until last year, in 2023, when BGX invested in OSL, providing full funding and bringing a new strategic direction. Our new management team has been introduced, along with many new business and technical personnel, leading to significant structural adjustments. These changes have continued into this year, 2024, when we finally achieved our first profitable year in the company’s history. This was a significant milestone for us.

What Adjustments and Changes Have Been Made by the Reorganized Team?

Kevin: The first and most important thing we did was introduce a brand-new management team, including myself. Many members of this team come from mainstream exchanges and have rich practical experience gained over the past few years in the crypto exchange sector.

Secondly, we have brought in a large number of talents from the tech field. Frankly, while OSL’s OTC Desk and Trading Desk had decent business volume, the foundation was relatively weak. At the same time, we integrated personnel with traditional financial backgrounds, especially in compliance and executive teams. Based on this blend of new and old, about 80% to 90% of the current management team is newly introduced. With this new management team in place, we have made significant changes in internal culture, execution efficiency, and team style, leading to cultural and strategic adjustments.

Another major change is that we have driven many cost-reduction and efficiency-enhancing initiatives. Specifically, we must solidify our compliance foundation; secondly, within the compliance framework, we must actively improve user service and product optimization. Throughout 2024, especially heading into the second half and fourth quarter, as the market conditions improve, our Hong Kong OTC compliant trading platform has become one of the largest in terms of market volume and is currently our largest source of revenue. This marks a clear strategic shift from “defending” to “advancing.”

Next, we have made substantial enhancements to our product line. We have repackaged our institutional products at OSL, such as launching the Omnibus Broker service to strengthen our collaboration with traditional financial institutions in Hong Kong.

Additionally, toward the end of last year, in Q4, we reintroduced OSL’s retail products. We hope to bring the security and liquidity advantages we established on the institutional side to retail clients and professional investors in the Hong Kong market, which represents a significant transition in our business model.

Moreover, several other key actions have taken place:

1. We have deepened our cooperation with traditional finance. For example, regarding ETFs, we provide custody services for crypto asset ETFs in the market, currently holding approximately 70% market share of the digital asset ETF custody market in Hong Kong.

2. We collaborated with China Asset Management to launch Hong Kong’s first tokenized fund for retail clients, serving as its distributor.

3. We have also redefined our brand. Previously, we felt that OSL’s brand image was somewhat cold and did not align with our future global development strategy, leading to a rebranding and repositioning effort.

4. We completed the acquisition of a licensed exchange in Japan and plan to commence operations there this year.

5. Additionally, we successfully obtained Australian digital asset-related licenses, laying the foundation for future business expansion.

6. Finally, we have invested substantial resources into the PayFi ecosystem direction as a key focus for medium- to long-term strategic investment.

In summary, these are some of the critical transformational actions we have taken over the past year.

What Are OSL’s Strategic Planning Goals for 2025?

Kevin: In 2025, we will further deepen and strengthen our operations based on the preliminary groundwork established in 2024. The first thing we refer to internally as the “Go Abroad” global expansion plan. We will continue to push for globalization, aiming to secure 2 to 4 additional operational licenses in different regions or countries by 2025 to facilitate business development in these areas.

Secondly, in regions where we have already obtained licenses, we will further “cultivate locally.” This means continuously optimizing our products and services in compliance with local frameworks to enhance the liquidity and operational efficiency of our trading platform.

A third very important focus is on infrastructure development. We believe this represents a significant difference from offshore exchanges. We will not focus our efforts on businesses like “trading” — these are more areas where offshore exchanges excel, such as high-leverage contracts and frequent token listings.

Instead, we are more concerned with building robust compliance infrastructure, especially in connecting the “fiat world” with the “crypto world.” We aim to achieve a genuine integration between traditional finance and crypto finance by constructing more stable modules for payment, settlement, clearing, and custody. In our terms, we want to solidify the foundation and establish a sustainable development platform. We believe this is where the most significant value of compliant exchanges will lie in the next five years.

What Local Challenges Does OSL’s Globalization Strategy Face?

Kevin: While we believe this is a strategy we must adhere to, it indeed requires substantial resources to tackle challenges. The countries we are currently applying for licenses in typically have well-established compliance frameworks and high regulatory requirements. The compliance demands in these areas are inherently complex, necessitating significant human resources to build compliance systems, including KYC (Know Your Customer) and AML (Anti-Money Laundering) core compliance infrastructure.

Our hypothesis is that if the crypto industry is to achieve higher dimensions of development in the next five years, it must move toward compliance. This is an unavoidable direction. Therefore, all our compliance investments, while progressing slowly and painfully in the short term, will ultimately become our moat in the long run. We believe that compliant digital asset platforms and offshore exchanges represent entirely different business logics. Offshore exchanges tend to focus more on maximizing cash flow and profits, whereas we align more with what we internally refer to as a “long slope with thick snow” business. We are willing to invest the time to build a solid foundation; once the groundwork is laid, the future growth potential will be immense. The rewards belong to those who adhere to long-termism, and we are committed to this path. On this premise, we will continue to deepen our focus on other Asian countries and the European market. The Middle East is also one of the regions where we will actively seek licenses this year.

Strict Token Regulation for Retail Investors in Hong Kong: What Future Opportunities for Opening Up?

Kevin: We have been closely communicating with regulatory agencies in Hong Kong. The discussions around token assessment and related mechanisms within the entire industry are very active, with many new initiatives exploring potential paths. We hope to see more flexibility in the future compared to the present.

From an overall perspective, Hong Kong has two significant advantages. First, it has a well-developed traditional financial system, providing a solid foundation for the development of virtual assets. Second, the Hong Kong government — especially the Securities and Futures Commission (SFC) and the Monetary Authority — has consistently shown a clear and proactive attitude, willing to foster the growth of this industry.

From the early establishment of regulatory frameworks to pushing for the launch of crypto ETFs last year, and now with the establishment of the ASPIRe framework, stablecoin regulatory legislation, and Project Ensemble, all indicate that the Hong Kong government genuinely seeks to promote the maturation of the entire virtual asset industry.

However, we also see areas for improvement at the execution level, such as the speed of regulatory execution, consistency of standards, and efficiency in policy implementation. If Hong Kong’s banking system can become more friendly toward the crypto industry in the future, especially regarding collaboration and support for account openings, it will significantly boost the industry.

For the retail market segment, we also hope to see the regulatory body open up more innovative and exploratory spaces in the future, granting the market more freedom for experiments and pilot projects. These are areas we believe Hong Kong can further enhance, and we are eager to see such changes gradually unfold.

How Will OSL Respond to Increasing Market Competition Amid the Surge in Licensed Institutions?

Kevin: We do not believe competition will become particularly fierce. On the contrary, I think that granting more licenses is beneficial for the entire industry and will have a positive impact. A market with only one or two licensed institutions is, in fact, unhealthy. Moderate competition can bring about more innovation, enhance the industry’s voice, further optimize regulation, and drive the entire market toward improvement. Our response strategy has always been very clear. Given the current regulatory restrictions in Hong Kong’s retail market, there is relatively limited space for expansion into retail users in the short term. Therefore, our strategy in Hong Kong is to deeply collaborate with traditional financial institutions.

This approach will differ from the strategies we may adopt in other markets. Specifically in Hong Kong, we are very clear that the local advantage lies in its prosperous traditional financial system. Therefore, we prefer to play the role of a partner within this ecosystem, providing mature and reliable digital asset services to banks, brokerages, and other traditional financial institutions. We aim to help these institutions better provide digital asset solutions for their professional investors, institutional clients, and even gradually opening retail clients in the future. We believe this is the most suitable positioning and strategy for us in the Hong Kong market.

Is Hong Kong Likely to Become a Bridge Connecting the Mainland Crypto Market?

Kevin: Our stance is very clear: to move forward resolutely within the compliance framework. In our rebranding, one of our core values is that “compliance is the bottom line.” All business and product planning must be built on a visible compliance foundation.

From my personal perspective, I certainly hope for a deeper linkage between the mainland and Hong Kong in the future. If policies truly open up, we are eager to participate and promote this. However, in our current business plans and product strategies, we do not consider this possibility as a premise or assumption, as the uncertainty surrounding this direction is too high. We do not wish for our entire strategy to be affected by such uncontrollable variables.

Therefore, everything we do revolves around the “current visible regulatory path.” If a certain direction lacks compliance visibility at present, it does not belong to our current business planning scope. We will not gamble on such high-risk uncertainties — this is explicitly excluded from our operating philosophy. Thus, I cannot make predictions regarding this issue, nor do I wish to.

From ToC to ToB: What Challenges and Profitability Issues Does the Strategic Shift Bring?

Kevin: Operating a compliant exchange is indeed much more complex than the previous offshore model. In the new compliance model, you need to provide genuinely valuable products and services while deeply understanding the regulatory requirements across different regions and earning the trust of local partners. These conditions significantly increase the difficulty of advancing the business.

Previously, the offshore model was relatively “simple,” as long as you attracted C-end users, the institutions would follow as user numbers increased; this was a flow-driven development logic. However, compliant exchanges operate entirely differently, especially in markets with strict compliance requirements, where the pace of advancement is entirely different. Nevertheless, for me, such challenges are more interesting. We do not simply define ourselves as a company leaning more toward B2B or B2C; rather, we consider problems from a mission-driven perspective.

Our mission is to become a trusted medium for all enterprises and individuals, enabling them to safely and conveniently access crypto assets and integrate them into real-life scenarios. This is how we define ourselves. Thus, we position ourselves as a bridge: on one side is the crypto world, and on the other is traditional finance or fiat currency. Our core work is to build this bridge strong and wide.

While this bridge is still relatively weak today, we see a very bright future for it. For instance, in the past couple of years, more and more publicly listed companies on Wall Street have started to invest in Bitcoin, and the global trading volume of stablecoins is rapidly increasing, penetrating many real-life scenarios.

Therefore, our starting point is to build a solid foundation, focusing on products and services along this direction. Then we will consider which markets are suitable for B2B and which for B2C. For example, in Hong Kong, while we anticipate that the short-term impact on B2C may not be significant, we are progressively introducing our mature products and services to retail users.

From this strategic starting point, I believe we are operating in completely different tracks from offshore exchanges. We do not need to compete directly; instead, we focus on differentiated positioning and may even complement or cooperate with each other in certain aspects. This is a comprehensive logic and direction we are committed to.

What Is OSL’s Future PayFi Strategic Layout and Development Path?

Kevin: We are actively advancing this area, but I cannot definitively say whether we will issue a product similar to a Visa card in the future. After all, we are a publicly listed company, and information disclosure is subject to strict regulations.

However, from a broader perspective, we believe the core elements of PayFi can be summarized in three points:

1. On-Ramp: Enabling users to conveniently enter the crypto world using fiat currency.

2. Off-Ramp: Allowing users to smoothly convert crypto assets back into fiat currency.

3. Helping various clients — whether B2B or B2C — truly integrate the capabilities of crypto, or Web3, into the traditional payment system to solve issues like low efficiency and complex settlements.

Furthermore, we see many derivative financial applications and functional modules emerging from this. These innovations will be key to driving the financial industry forward. We believe this will be one of the core directions that could fundamentally change the traditional financial landscape in the next 5 to 10 years. Therefore, we are very excited about this direction and have decided to strategically transform the entire company to increase investment and firmly lay out this path.

While we cannot guarantee that this area will bring significant revenue or profits to the company by 2025, from the perspective of long-term strategy and product capability building, PayFi will be a very important core segment for us. So we will continue to explore, accumulate capabilities, and make forward-looking investments and expansions in all related directions.