TechFlow news, June 28 — According to Hong Kong media Ming Pao, the Securities and Futures Commission (SFC) and the Financial Services and the Treasury Bureau have released a consultation paper proposing legislation to establish a licensing regime for digital asset (i.e., virtual asset) trading and custodial service providers. The paper states that any operator providing virtual asset services — whether simple activities such as cryptocurrency trading, withdrawals, or fiat currency exchange, or more complex operations like brokerage and large-scale transactions — must obtain a license from the SFC. This effectively brings over-the-counter (OTC) virtual asset platforms under regulatory oversight, with requirements significantly stricter than last year’s proposal, which only required OTC platforms to apply for licenses from customs authorities. Additionally, the consultation paper specifies that there will be no grace period upon the law's enactment, nor any recognition of deemed licensing. Operators failing to comply must cease operations immediately, and unlicensed operation could result in a maximum fine of HKD 5 million and imprisonment for up to seven years.
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