Hong Kong Tightens Crypto Custody Rules to Bolster Investor Protection

Hong Kong's Securities and Futures Commission (SFC) has introduced stringent new custody requirements for licensed VIRTUAL asset trading platforms (VATPs), marking a significant step in the city's push to establish itself as Asia's premier digital asset hub. The rules mandate robust safeguards including cold wallet management protocols, real-time threat monitoring systems, and clear senior management accountability.

The regulatory move follows a targeted review revealing cybersecurity weaknesses in existing exchange operations. By enforcing these standards, Hong Kong aims to create a competitive advantage over Singapore's more restrictive approach to retail crypto services while addressing critical infrastructure vulnerabilities identified in its ASPIRe strategy framework.