Hong Kong: Unlicensed Operation of Virtual Asset Trading and Custody Services Receives Maximum Sentence of 7 Years in Prison

BlockBeats News, June 28th, according to Ming Pao, Hong Kong's Securities and Futures Commission and Treasury have released a consultation paper proposing legislation to establish a licensing system for digital asset (i.e. virtual asset) trading and custody service providers. The paper mentioned that it is proposed to require operators of virtual asset services, whether small such as virtual currency trading, withdrawals, fiat exchange, or complex such as brokerage activities, large-scale transactions, to apply for a license from the securities regulator. This is equivalent to bringing over-the-counter (OTC) virtual asset trading platforms under regulation, and the requirements are much stricter than last year's consultation on OTC virtual asset platforms applying for licenses from the customs. At the same time, the consultation paper also mentioned that there will be no transition period upon the law coming into effect, or the notion of being considered licensed. Operators not in compliance must immediately cease operations, and unlicensed operations could face a maximum fine of 5 million yuan and up to 7 years of imprisonment.