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Hong Kong SFC Sets Stricter Custody Rules for Licensed Crypto Platforms

The SFC has mandated new custody standards for virtual asset trading platforms, setting the foundation for an upcoming licensing regime for standalone custodians and reinforcing Hong Kong’s goal of a secure digital asset hub.

Fact Check
The provided evidence strongly supports the statement. Multiple sources from 2023 (Reed Smith, Skadden) confirm that the Hong Kong SFC introduced a new, tightened regulatory and licensing regime for virtual asset platforms. A central part of these new regulations are requirements for the safe custody of client assets. Another source (Regulation Tomorrow) even describes the current custody requirements as 'rigid,' which is synonymous with 'strict.' The evidence consistently points to the SFC establishing formal, stricter rules for custody as part of its new licensing framework.
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Summary

Hong Kong’s Securities and Futures Commission (SFC) has introduced stricter custody requirements for licensed virtual asset trading platforms, responding to increased cybersecurity incidents and asset losses at overseas exchanges. The new standards include robust cold-wallet systems, third-party wallet oversight, strict private key controls, air-gapped hardware, address whitelisting, independent audits, and staff training to prevent blind signing. These measures, effective immediately, will also form the baseline for a forthcoming licensing regime for standalone virtual asset custodians. The announcement follows the Legislative Council’s passage of a stablecoin licensing framework requiring fiat-referenced stablecoin issuers to be licensed by the Hong Kong Monetary Authority (HKMA). Standard Chartered and Animoca Brands have formed a joint venture, Anchorpoint, to seek a stablecoin license under this regime. The SFC will introduce related legislation with provisions for expedited approvals and higher fees. Public consultation closes on 29 August 2025.

Terms & Concepts
  • Cold wallet: A cryptocurrency storage method that keeps assets offline to reduce the risk of hacks and cyberattacks.
  • Custodian: An entity responsible for safeguarding clients’ assets, including digital currencies, under regulated security and operational standards.
  • Fiat-referenced stablecoin (FRS): A type of stablecoin whose value is pegged to a fiat currency and backed by reserve assets, redeemable at par value.