The Hong Kong Securities and Futures Commission (SFC) and the Financial Secretary have launched a strict licensing framework for virtual asset trading and custody services. The new regulations require all service providers—from simple cryptocurrency-fiat currency exchanges to complex brokerage businesses—to obtain SFC approval. Notably, the new rules do not provide any transition period; unauthorized operators must immediately cease operations or face severe penalties.
The regulatory crackdown is strong: unauthorized operations may result in fines up to 5 million yuan (approximately $700,000) and seven years of imprisonment. This effectively brings over-the-counter (OTC) crypto platforms under formal regulation, with requirements far exceeding the customs licensing scheme proposed last year for fiat OTC service providers.
