The Hong Kong’s Securities and Futures Commission (SFC) has rolled out stricter custody standards for licensed virtual asset trading platforms (VATPs) in a bid to protect client-held crypto assets better.
The regulator’s new measures follow a wave of high-profile hacks and security breaches at overseas crypto exchanges, where weaknesses in custody controls have led to significant losses. An SFC review earlier this year found that some Hong Kong platforms also showed gaps in cybersecurity, raising concerns about the safety of customer funds in the local crypto market.
The Hong Kong SFC issued new guidance for virtual asset trading platforms to strengthen custody standards, citing global security incidents and gaps found in a recent review. The circular outlines minimum requirements for wallet infrastructure, access controls, and management…
— Wu Blockchain (@WuBlockchain) August 15, 2025
According to the SFC, common risks include compromised third-party wallet solutions, insufficient transaction verification processes, and inadequate access controls over devices used to approve crypto transactions. These vulnerabilities remain persistent threats to crypto custody worldwide.
Under the updated framework, VATPs must deploy more secure cold wallet infrastructure, introduce real-time threat monitoring, and apply strict governance over third-party wallet providers. Senior management will be directly accountable for meeting the SFC’s minimum standards and ensuring that custody operations align with best practices.
The circular also lists recommended safeguards, such as multi-signature authentication and independent transaction verification, that crypto platforms are urged to adopt immediately. These standards will form the foundation of a wider custody framework under Hong Kong’s “ASPIRe” roadmap, which aims to accelerate the adoption of advanced crypto custody technologies.
Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, stressed that protecting client crypto assets is essential for building a competitive and trusted digital asset ecosystem in Hong Kong, particularly amid growing institutional interest and rising global cyber threats. The move signals Hong Kong’s intent to position itself as a secure, institutional-grade hub for regulated crypto trading and custody.
The SFC’s latest action follows its April 7 decision allowing licensed crypto firms to offer staking services, provided they adhere to strict risk disclosures and operational safeguards. Staking enables customers to earn yields by locking their cryptocurrency, but the SFC insists such offerings maintain high transparency and security standards.
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