Hong Kong Regulator Implements New Custody Requirements for Crypto Exchanges
Hong Kong's Securities and Futures Commission (SFC) introduced new custody requirements for licensed crypto exchanges to enhance client asset protection and strengthen the city’s position as Asia’s digital asset hub. Key points include:
- Minimum standards for licensed virtual asset trading platforms (VATPs)
- Focus on senior management responsibility, cold wallet operations, third-party wallet solutions, and real-time threat monitoring
- Response to identified inadequacies in cybersecurity and custody controls during a review
- Aims to differentiate Hong Kong from Singapore's restrictive stance on retail crypto services
- Part of the SFC’s ASPIRe strategy to address liquidity fragmentation, regulatory arbitrage, and market volatility
- Previous regulatory moves included licensing regimes for over-the-counter trading and custody services and approval of staking services under strict conditions