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Unlicensed Operation of Virtual Asset Trading and Custody Services in Hong Kong Punishable by Up to 7 Years in Prison

Unlicensed Operation of Virtual Asset Trading and Custody Services in Hong Kong Punishable by Up to 7 Years in Prison

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星球日报星球日报2025/06/28 06:17

Odaily Planet Daily News: According to Hong Kong Ming Pao, the Hong Kong 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 custody service providers. The document proposes that all virtual asset service operators—whether engaged in activities as simple as cryptocurrency trading, withdrawals, and fiat currency exchanges, or as complex as brokerage services and large-scale transactions—must apply for a license from the SFC. This effectively brings over-the-counter (OTC) virtual asset trading platforms under regulatory oversight, with requirements that are significantly stricter than last year’s consultation, which only required OTC platforms to apply for a license from Customs. The consultation paper also states that there will be no transitional period or deemed licensing when the law takes effect; operators not in compliance must cease operations immediately. Unlicensed operations may be subject to a maximum fine of HKD 5 million and imprisonment for up to seven years.

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