The Hong Kong Securities and Futures Commission (SFC) has established new asset custody standards for licensed cryptocurrency exchanges. The tightening of regulations was prompted by an analysis of platforms that revealed vulnerabilities in the security systems of some of them.
According to a statement issued on August 15, licensed Virtual Asset Trading Platforms (VATP) must critically reassess their asset custody practices following numerous hacks of overseas exchanges that resulted in significant losses for clients.
The SFC has set minimum standards covering the accountability of senior management, cold wallet operations, the use of third-party custodial solutions, and real-time threat monitoring. The requirements outlined in the circular took effect immediately.
In February, the regulator announced new licensing regimes for over-the-counter trading and custodial services, as well as a review of the approach to derivatives and margin trading of virtual assets.
In April, the SFC allowed licensed exchanges and funds to offer staking services.
