SFC Tightens Digital Asset Custody with 24/7 Monitoring
The Hong Kong Securities and Futures Commission (SFC) has updated its digital asset custody standards for licensed virtual asset trading platforms (VATPs). The digital asset custody rules now require platforms to detect unauthorized wallet access and restrict withdrawals to whitelisted addresses.
All system, network, and wallet activity must undergo real-time threat monitoring, operating 24/7. Cold wallets may not host smart contracts, and VATPs must apply whitelist controls alongside systematic transaction verification for all cold wallet transfers.
Platforms must reconcile on-chain client assets with ledger balances in real time and report any discrepancies immediately. They must assign senior management oversight of cold wallet operations and verify security measures of third-party wallet providers.
Effective immediately, these measures address vulnerabilities revealed by overseas cyber incidents and a local review. The SFC aims to strengthen client asset protection, reduce external attack risks, and enhance market trust. The updated custody standards support Hong Kong’s broader crypto reforms, including stablecoin and derivatives licensing, to bolster its position as a global crypto hub.
Bullish
The SFC’s new digital asset custody standards strengthen client asset protection by enforcing real-time monitoring, withdrawal whitelists, and stricter wallet controls. These measures reduce security risks and boost market confidence, encouraging greater trading activity and institutional involvement. By addressing vulnerabilities and aligning with broader regulatory reforms, the updates are likely to have a bullish impact on the Hong Kong crypto market.