Hong Kong SFC Tightens Custody Rules for Crypto Platforms

Hong Kong's Securities and Futures Commission (SFC) has rolled out stringent new custody standards for licensed VIRTUAL asset trading platforms, following a review that exposed vulnerabilities in security protocols and internal controls. The regulatory move comes amid growing scrutiny of wallet management practices across the crypto industry.

The ASPIRe initiative now mandates minimum security benchmarks, requiring platforms to implement robust cold storage solutions, multi-party transaction approvals, and rigorous third-party vetting. Senior management faces heightened accountability for compliance failures under the revised framework.

Platforms must deploy qualified risk management personnel and maintain air-gapped approval systems for transactions. The rules specifically address private key generation, cryptographic seed storage, and hardware security module requirements - a direct response to recent high-profile custody failures in the sector.