Tightened Crypto Safekeeping Regulations Imposed in Hong Kong due to International Security Worries
The Hong Kong Securities and Futures Commission (SFC) has introduced stricter custody standards for licensed virtual asset trading platforms (VATPs). These updated standards aim to enhance asset protection and address cybersecurity concerns, particularly in the wake of significant global losses due to crypto exchange hacks.
Key Features of the Updated Standards
- Senior Management Accountability: Platforms must ensure that senior management is responsible for overseeing custody practices and security measures. This includes ensuring that management is aware of and actively involved in the implementation and monitoring of security protocols.
- Secure Cold Wallet Operations: The guidelines emphasize the importance of robust cold wallet infrastructure. Platforms must implement secure cold wallet management practices to minimize the risk of asset theft.
- Third-Party Wallet Oversight: The SFC requires platforms to have effective oversight of third-party wallet solutions. This includes ensuring that any third-party services used for asset storage are secure and compliant with the new standards.
- Real-Time Threat Monitoring: Platforms must implement real-time threat detection and monitoring systems to quickly identify and respond to potential cybersecurity threats.
Addressing Cybersecurity Concerns
The new standards are a direct response to both local and global cybersecurity incidents. The SFC's targeted review earlier in 2025 identified inadequacies in some current exchanges' cybersecurity and custody controls, prompting the implementation of stricter guidelines. By setting clear expectations in these areas, Hong Kong aims to foster a trusted digital asset ecosystem, distinguishing itself as a secure hub for virtual asset trading.
Broader Regulatory Context
These updated standards are part of the SFC's ASPIRe strategy, which includes a five-pronged plan to address regulatory challenges in the digital asset market. The strategy involves expanding regulated products and services while enhancing oversight and ensuring client asset protection. By prioritizing asset security and regulatory compliance, Hong Kong seeks to establish itself as a competitive and sustainable digital asset hub in Asia.
- The SFC's new custody rules for virtual asset trading platforms (VATPs) are part of Hong Kong's broader digital asset strategy.
- Platforms must now ensure that outsourced custody solutions meet the same security standards as in-house systems.
- A new licensing regime for stablecoin issuers launched on August 1, aligning with Hong Kong's broader digital asset strategy.
- This move further marks Hong Kong's commitment to building a secure and structured digital asset market.
- Mainland China continues to enforce its ban on cryptocurrency trading and mining, while Hong Kong is taking a different path.
- The circular emphasizes the role of senior management in overseeing custody operations.
- The rules were issued in response to international incidents involving crypto platforms and client losses due to security lapses.
- The SFC's new rules address key areas like cold wallets and cyber threat monitoring for VATPs.
- Hong Kong's Securities and Futures Commission (SFC) has introduced new custody rules for licensed crypto trading platforms.
- The new rules are part of Hong Kong's strategy to improve its digital asset space.
- The SFC's directive follows a detailed review of licensed platforms conducted earlier this year, which found weak cybersecurity controls in some platforms.
- The SFC's new custody rules for licensed crypto trading platforms, introduced due to international incidents involving crypto platforms and client losses due to security lapses, are part of Hong Kong's strategy to improve its digital asset space.
- Platforms must now ensure that outsourced custody solutions meet the same security standards as in-house systems, in line with the new licensing regime for stablecoin issuers launched on August 1, aligning with Hong Kong's broader digital asset strategy.
