Hong Kong's Securities and Futures Commission, along with the Treasury Bureau, has released a consultation document proposing a stringent licensing system for digital asset trading and custody service providers. The proposal mandates that all virtual asset service providers, from small-scale currency exchanges to large brokerage operations, must obtain a license from the Securities and Futures Commission. This move aims to bring over-the-counter (OTC) platforms under tighter regulatory oversight. The proposed legislation includes severe penalties for non-compliance, with operators facing fines up to 5 million yuan and imprisonment for up to 7 years if they operate without a license. Notably, the proposal does not include a transition period, requiring immediate compliance from all operators once the law is enacted.