Hong Kong SFC Tightens Virtual Asset Custody Rules with Enhanced Security
The Hong Kong Securities and Futures Commission (SFC) has introduced stricter virtual asset custody rules for all licensed trading platforms. Under the new requirements, platforms must segregate client assets from business funds, enhance record-keeping, undergo independent audits, and store assets in multi-layer protected wallets. They must also strengthen crypto custody practices by implementing real-time threat monitoring, bolstering cold wallet management, maintaining documented best practices, and disclosing custody risks to investors. Non-compliant platforms face license suspension or revocation.
These virtual asset custody measures aim to prevent theft and fraud, restore investor confidence, and align Hong Kong’s crypto market with global investor protection standards. The overhaul also paves the way for advanced custody technologies and is expected to draw more institutional capital to the region. Analysts see this robust framework as key to boosting market legitimacy and long-term growth in the digital asset ecosystem.
Bullish
The SFC’s tougher virtual asset custody rules are likely to bolster institutional confidence and attract capital, supporting crypto trading volumes and stability. In the short term, platforms may face compliance costs and operational adjustments, which could dampen trading activity. Over the long term, enhanced security measures and investor protections are expected to strengthen market legitimacy and drive sustained growth, making the news overall bullish for the Hong Kong crypto market.