Hong Kong Tightens Custody Rules for Crypto Platforms Amid Security Concerns

Hong Kong's Securities and Futures Commission (SFC) has mandated stricter custody standards for licensed VIRTUAL asset trading platforms (VATPs), citing recent security breaches and operational deficiencies. The "ASPIRe" initiative requires immediate reviews of wallet protection systems, with Executive Director Eric Yip emphasizing that "client asset protection must remain a top priority" for Hong Kong to maintain its competitive edge in digital assets.

The regulator revealed vulnerabilities in three unregistered exchanges—Tokencan, VBIT Exchange, and HKD.com—accused of fraudulent activities that left investors unable to access funds. Cybersecurity audits further exposed critical flaws including outdated encryption and weak access controls across multiple platforms.