Hong Kong’s Securities and Futures Commission (SFC) has rolled out stricter custody rules for licensed crypto exchanges to protect user assets.
The Hong Kong regulator also conducted a targeted review earlier this year to test VATPs against similar vulnerabilities. “Whilst most Platform Operators reported having fundamental control measures in place, certain responses were deemed inadequate,” noted the circular.
VATPs aren’t the only ones expected to meet the requirements in today’s document release. The same standards will also apply to virtual asset custodians, and the SFC notes these guidelines will serve as the prerequisites for transitioning to more advanced custody technologies.
Dr Eric Yip, Executive Director of Intermediaries at SFC, said:
In order for Hong Kong to foster a competitive, sustainable and trusted digital asset ecosystem, client asset protection must always remain a top priority for all licensed VATPs, which can leverage the SFC’s practical guide to step up their custody practices especially amid heightened risks globally.
The move has followed other regulatory efforts by Hong Kong to present itself as more crypto-friendly. In May, the city’s stablecoin bill passed legislature and went into action at the start of this month.
