Key Takeaways
- Hong Kong’s SFC has implemented new standards to enhance the custody of virtual assets for licensed trading platforms.
- The guidance includes requirements for stronger wallet infrastructure, access controls, and management oversight to address global security risks.
Recently, the Securities and Futures Commission (SFC) in Hong Kong has released a circular to all licensed virtual asset trading platforms (VATPs), outlining essential standards and best practices for protecting client digital assets.
These measures, introduced as part of the “Safeguard” pillar of the SFC’s ASPIRe roadmap, come in response to findings from a targeted review and a series of high-profile custody failures on international platforms. These incidents have highlighted vulnerabilities in wallet infrastructure, transaction verification processes, and access controls.
By establishing clear expectations regarding senior management accountability, secure cold wallet operations, third-party wallet oversight, and real-time threat monitoring, the SFC aims to enhance custody resilience across the industry. This initiative is crucial for ensuring the secure and sustainable growth of Hong Kong’s virtual asset sector.
“To cultivate a competitive, sustainable, and trustworthy digital asset ecosystem in Hong Kong, safeguarding client assets must always be a top priority for all licensed VATPs. They can utilize the SFC’s practical guidelines to enhance their custody practices, especially in light of heightened global risks,” stated Dr. Eric Yip, the SFC’s Executive Director of Intermediaries.