BC Technology Group Limited (SEHK:863) is exploring the sale of its crypto platform OSL, one of only two exchanges licensed under digital-asset rules the city introduced in June, people familiar with the matter said. BC Technology has gauged interest in OSL from possible buyers such as industry players and funds, and a HKD 1 billion ($128 million) valuation has been mooted, the people said, asking not to be identified discussing private information. Shares of BC Technology slumped as much as 16.7% in early Tuesday trading in Hong Kong, the biggest decline since June 12, following the Bloomberg News report.

OSL's platform spans prime brokerage, exchange and custody services for crypto markets as well as a business providing infrastructure to financial institutions so that they can offer virtual-asset trading. BC Technology may decide to sell parts of OSL rather than the whole business, the people said. Deliberations are ongoing and there's no guarantee they will result in a deal, the people said.

"We are a highly transparent and regulated company," a representative of BC Technology said in response to a Bloomberg News query. "We do not comment on market rumors and speculations." Hong Kong rolled out a digital-asset rulebook on June 1 that aims to foster a hub for the sector and allows retail investors to trade larger tokens on licensed exchanges. But crypto demand remains weak after last year's market rout and ensuing bankruptcies, while the city's strict framework may entail higher costs.

Hong Kong is also grappling with the fallout of the blowup at the unlicensed JPEX exchange, a scandal that further tarnished the digital-asset industry.