Hong Kong Tightens Crypto Exchange Custody Rules Amid Rising Global Hacks

Hong Kong's Securities and Futures Commission (SFC) has introduced stringent new custody requirements for licensed virtual asset trading platforms (VATPs) following a surge in global crypto exchange breaches. The regulatory overhaul mandates enhanced cold wallet management and real-time threat monitoring, with failure to comply risking license revocation.

The move comes as Hacken reports $3.1 billion stolen in crypto attacks during the first half of 2025 alone. A targeted SFC review revealed gaps in existing security controls, prompting what Executive Director Dr. Eric Yip describes as 'baseline requirements for Web3 asset protection.'

Notably, the standards extend beyond exchanges to encompass standalone custodians, creating a unified security framework. Industry observers suggest this positions Hong Kong as the first major jurisdiction to implement enterprise-grade custody rules modeled on traditional finance safeguards.