Hong Kong SFC Tightens Crypto Platform Custody Rules
- The SFC enacts new rules for crypto custody platforms.
- SFC’s new rules enhance client asset protection.
- Industry anticipates increased compliance and security expenditures.
Hong Kong’s Securities and Futures Commission implemented tighter custody rules for crypto platforms in August 2025, focusing on security enhancements amid rising global crypto theft incidents.
The stricter regulations aim to protect client assets, potentially altering market dynamics by increasing costs for smaller platforms and enhancing Hong Kong’s appeal to institutional investors.
Hong Kong’s Securities and Futures Commission enforced stricter regulations on crypto custody platforms in August 2025 to improve security and asset protection.
The regulations address increasing global crypto thefts and aim to establish Hong Kong as a secure digital asset hub.
August 2025 Sees SFC Enforcing Cold Storage Security
The SFC’s new rules became effective in August 2025, focusing on enhancing cold storage security and banning smart contracts in cold wallets. These changes address security concerns globally.
Dr. Eric Yip stated the SFC’s intention to boost client asset protection, aiming for a trusted digital asset ecosystem. Major tokens like BTC and ETH face new custody regulations.
“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.”
Ex.io CEO Comments on Compliance vs. Innovation Costs
Ex.io’s CEO Chen Wu commented on Hong Kong’s enhanced competitive positioning, stressing the balance between innovation and compliance costs. Smaller exchanges may struggle with increased financial burdens.
The rules could lead to market concentration, favoring larger firms. However, they aim to build institutional trust, potentially attracting significant investors to Hong Kong’s crypto scene.
Regulatory Inspiration from Japan and Singapore
The new custody rules follow past hacking incidents that prompted similar regulatory responses in Japan and Singapore. The SFC’s previous initiatives set the groundwork for current reforms.
Industry experts predict a shift in market dynamics with compliance adjustments across exchanges. This may influence total value locked and asset flow, impacting market behavior.
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