Hong Kong Cracks Down: Crypto Exchanges Face Stricter Custody Rules to Protect Investors

Hong Kong’s financial watchdog just dropped the hammer—licensed crypto exchanges must now lock down client assets like Fort Knox. No more cowboy custody. Here’s what changed.

The New Gold Standard

Cold storage mandates, real-time audits, and segregated accounts are now non-negotiable. The Securities and Futures Commission (SFC) wants to prevent another 'oops-we-lost-your-Bitcoin' fiasco. Exchanges have 90 days to comply or risk losing their licenses.

Why This Hurts (and Helps)

Tighter rules mean higher costs for exchanges—expect some to fold or flee. But for investors? Finally, a regulatory backstop in a Wild West market. Just don’t expect Wall Street-level protections yet.

The Irony

Banks still gamble with derivatives at 50:1 leverage, but sure—let’s pretend crypto custody was the glaring risk. Hong Kong’s move sets a precedent: adapt or die. The era of trust-me-bro security is over.