- Hong Kong’s Securities and Futures Commission has introduced minimum custody standards for all licensed virtual asset trading platforms.
- The circular emphasizes that senior management must be directly responsible for the integrity and oversight of custody systems.
- These custody enhancements are a pivotal part of the SFC’s broader ASPIRe framework.
Hong Kong’s Securities and Futures Commission (SFC) has issued a new circular to all licensed virtual asset trading platforms (VATPs) offering virtual asset services. The circular lays out rules to protect client-held digital assets and to promote a secure, credible crypto landscape in the city.
What’s inside the circular?
The SFC’s new circular strengthens how licensed platforms must look after client crypto. Platforms must reinforce how they store client crypto securely. This includes better cold wallet infrastructure, oversight of any third-party wallets, and real-time cyber threat monitoring.
Senior management must be actively involved in overseeing custody setups. It can no longer be a task for the back-office staff, but a leadership responsibility. The circular responds to past failures worldwide, like missing authentication steps and poor access controls, that put user funds at risk. Now, Hong Kong platforms must close those security gaps.
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A steady regulatory roadmap
“In order for Hong Kong to foster a competitive, sustainable and trusted digital asset ecosystem, client asset protection must always remain a top priority for all licensed VATPs, which can leverage the SFC’s practical guide to step up their custody practices especially amid heightened risks globally,” said Dr Eric Yip, the SFC’s Executive Director of Intermediaries.
These custody rules are part of the broader ASPIRe framework. Hong Kong wants to advance digital asset regulation across five pillars, mainly Access, Safeguards, Products, Infrastructure, and Relationships. The directive also provides examples of good practices along with its expected minimum standards that VATP operators must meet.
The clear standards set by Hong Kong make it easier for institutional investors to enter the market and set the country on the path toward becoming a regulatory-aware crypto hub.
