Hong Kong’s SFC Outlines Stricter Custody Expectations for Crypto Platforms
The Hong Kong Securities and Futures Commission (SFC) has set stringent custody expectations for licensed virtual asset trading platforms (VATPs). This initiative aims to enhance user protection and support the crypto sector's development under the "ASPIRe" roadmap.
Key Points on Asset Protection
- The SFC's rules establish a baseline for a forthcoming licensing regime for standalone virtual asset custodians.
- This regulation is designed to protect users and their assets amid rising cybersecurity incidents at centralized platforms.
- Concerns include wallet vulnerabilities and insufficient controls, prompting the need for robust cold-wallet infrastructure.
- Requirements include stringent private key management, air-gapped hardware, transaction verification, address whitelisting, third-party assessments, and staff training.
- Operators must implement continuous security monitoring in line with the upcoming custodian licensing regime.
Hong Kong's Ambitions as a Crypto Hub
- A proposal mandates licensing for entities safeguarding clients' virtual assets, targeting implementation by Q1 2025.
- A 12-step plan was introduced to bolster security, attract investors, and integrate blockchain in Traditional Finance (TradFi).
- The “Stablecoins Bill” was passed, allowing institutions to apply for stablecoin issuance licenses from the Hong Kong Monetary Authority (HKMA).
- This framework permits firms to launch stablecoins backed by fiat, ensuring regulatory standards and market confidence.