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Hong Kong’s Securities and Futures Commission (SFC) has introduced stringent crypto custody regulations to enhance security for licensed virtual asset trading platforms (VATPs), effective immediately. The move follows global security breaches resulting in over $3 billion in crypto losses in 2025, with hackers exploiting weak wallet systems and access controls.
The SFC’s new standards, part of its “ASPIRe” roadmap, mandate VATPs to:
- Deploy secure cold wallet infrastructure, banning smart contracts to reduce online attack risks.
- Implement real-time threat monitoring and multi-signature authentication.
- Ensure senior management accountability for asset protection.
- Conduct independent transaction verification and maintain strict address whitelisting.
These measures address vulnerabilities like compromised third-party wallets and inadequate verification processes, identified in a 2025 SFC review. Dr. Eric Yip, SFC’s Executive Director of Intermediaries, stated, “Client asset protection is paramount to fostering a trusted digital asset ecosystem.”
Contrary to the draft, Julia Leung was not quoted, and no specific insurance or compensation mandates were mentioned. The rules apply immediately, not later this year, with no transitional period specified.
The regulations aim to solidify Hong Kong’s role as Asia’s leading regulated crypto hub, especially after approving spot Bitcoin and Ether ETFs in 2024 and launching a stablecoin licensing regime in August 2025. Industry experts predict these standards will attract institutional investors while weeding out non-compliant platforms, enhancing market trust.
By aligning with global best practices, Hong Kong’s SFC is setting a benchmark for crypto security, ensuring investor funds are safeguarded against rising cyber threats. Stay updated on Hong Kong’s crypto regulations for a secure investment journey.
