Hong Kong SFC Tightens Custody Standards for Crypto Exchanges Under ASPIRe Roadmap

Hong Kong’s securities watchdog rolled out new custody requirements for licensed crypto exchanges, reinforcing its pledge to protect client assets as the city advances its bid to become Asia’s digital asset hub.

In a circular issued Friday, the Securities and Futures Commission (SFC) set minimum standards for licensed virtual asset trading platforms (VATPs) covering senior management responsibility, cold wallet operations, the use of third-party wallet solutions and real-time threat monitoring.

The move comes after the regulator’s targeted review earlier this year found “inadequacies” in some current exchanges’ cybersecurity and custody controls. The guidelines also form the basis of expectations for virtual asset custodians more broadly.

By coupling product expansion with hard rules on asset protection, Hong Kong is looking to differentiate itself from regional rival Singapore, which has taken a more restrictive stance on retail crypto services.

The announcement ties directly into the Infrastructure and Safeguards pillars of the SFC’s ASPIRe strategy, unveiled in February at CoinDesk’s Consensus 2025 in Hong Kong, which outlines a five-pronged plan to address liquidity fragmentation, regulatory arbitrage, and market volatility while expanding the range of regulated products and services.

The custody push follows a series of regulatory moves this year aimed at widening market access while tightening oversight.

In February, the regulator announced new licensing regimes for over-the-counter trading and custody services, alongside a review of derivatives and margin trading for virtual assets. In April, it greenlit staking services for licensed exchanges and funds, albeit under strict asset control and risk disclosure requirements.