Hong Kong Regulator Tightens Custody Standards for Licensed Crypto Exchanges
Hong Kong’s securities watchdog rolled out new custody requirements for licensed crypto exchanges, reinforcing its pledge to protect client assets as the city advances its bid to become Asia’s digital asset hub. In a circular issued Friday, the Securities and Futures Commission (SFC) set minimum standards for licensed virtual asset trading platforms (VATPs) covering senior management responsibility, cold wallet operations, the use of third-party wallet solutions and real-time threat monitoring. The move comes after the regulator’s targeted review earlier this year found “inadequacies” in some current exchanges' cybersecurity and custody controls. The guidelines also form the basis of expectations for virtual asset custodians more broadly. By coupling product expansion with hard rules on asset protection, Hong Kong is looking to differentiate itself from regional rival Singapore, which has taken a more restrictive stance on retail crypto services. The announcement ties directly...