Hong Kong SFC Imposes Stricter Custody Rules for Crypto Platforms
Hong Kong's Securities and Futures Commission (SFC) has introduced stringent new custody standards for licensed VIRTUAL asset trading platforms (VATPs), mandating enhanced security measures to protect client funds. The August 15 circular requires cold wallet infrastructure, real-time threat monitoring, and robust withdrawal controls—a direct response to global exchange breaches that have drained millions.
Regulators found most local operators relied on basic safeguards, leaving assets vulnerable. "Recent overseas failures demonstrate the consequences of weak custody practices," the SFC stated, emphasizing the need for governance overhauls. The rules align with Hong Kong's push to legitimize crypto while mitigating risks that have plagued the sector.
