OTC desks and custodians will also face enhanced custody oversight in Hong Kong.
Hong Kong is raising the bar for how crypto platforms store client assets. The Securities and Futures Commission (SFC) has issued fresh custody guidance, marking a shift toward stricter security standards.
This move comes amid a global rise in cyber breaches targeting virtual asset platforms. Industry watchers believe these measures could reshape how exchanges operate in the city.
The new rules are part of the regulator’s broader “ASPIRe” roadmap to strengthen the market’s infrastructure.
Officials see custody as a priority for building a trusted digital asset hub. As a result, both existing exchanges and new applicants will need to comply with higher operational requirements.
According to the SFC’s August 15 announcement, all licensed virtual asset trading platforms must adopt stronger custody practices. This includes upgrading cold wallet systems, tightening access control over approval devices, and implementing real-time threat monitoring.
Operators must also ensure senior management remains directly accountable for safeguarding assets.
The regulator’s guidance follows a targeted review conducted earlier this year. The assessment found weaknesses in certain platforms’ resilience to cyberattacks. In some cases, gaps were traced to reliance on third-party wallet solutions with insufficient transaction verification.
Social media commentary, including a post by industry tracker Wu Blockchain, points out that these measures aim to close global security gaps. Incidents overseas, where poor controls have led to significant asset losses, have influenced the policy shift.
The SFC wants Hong Kong’s ecosystem to avoid similar vulnerabilities.
Dr. Eric Yip, Executive Director of Intermediaries at the SFC, emphasized that asset protection remains a top priority. He noted that licensed platforms could use the regulator’s practical guide to strengthen practices in the face of growing risks.
Alva, an automated crypto news feed, highlighted that the new custody oversight will extend beyond exchanges.
Over-the-counter (OTC) desks and custodians will also fall under tighter regulatory scrutiny. This broad scope aims to align custody practices with traditional finance safeguards.
For platforms, this could mean short-term operational challenges. Infrastructure upgrades and compliance audits may increase costs, particularly for smaller operators.
However, industry observers suggest that the long-term benefits, such as greater institutional confidence, could outweigh the initial strain.
