Hong Kong is making a big move to secure its spot as a leading digital asset center. Its financial watchdog, the Securities and Futures Commission (SFC), just released tough new rules for handling cryptocurrencies. These standards aim to protect customer funds better. They also want to boost trust in the market. The changes took effect right away.
This decision comes after looking closely at past issues. Many global incidents showed how weak cybersecurity can be. Hong Kong wants to fix these problems. It hopes to build a strong base for virtual assets across Asia.
The new rules mean licensed virtual asset trading platforms, or VATPs, must review how they keep customer money safe. This includes cold wallet systems and watching third-party wallets. Platforms must also monitor threats around the clock. The SFC stated these rules will set the main expectations for all virtual asset custody providers. This will help create consistent safety across the industry.
Stricter Standards for Crypto Storage
The SFC laid out several key requirements. Platforms must use special hardware, called certified Hardware Security Modules (HSM), to manage their digital keys. Money can only be sent to approved addresses. Companies also need a security center that runs 24/7. This center must watch systems, networks, wallets, and all related equipment.
Private keys, which control access to crypto funds, must be created and stored offline. These areas should be isolated and physically secure. The SFC strongly suggested using strong multi-factor physical access controls.
One major new rule affects how cold wallets work. Cold wallets, which store crypto offline, cannot use smart contracts on public blockchains. This step aims to reduce ways hackers can attack online.
These new rules fit into the SFC’s wider “ASPIRe” plan. This strategy was first shared in February 2025 at the Consensus 2025 event in Hong Kong. It seeks to fix issues like split liquidity and market ups and downs. The SFC’s own review earlier this year found “deficiencies” in how some platforms handled security and custody. This led to the creation of these updated guidelines.
Hong Kong’s Push to Become Asia’s Crypto Hub
This is part of Hong Kong’s long-term plan to be a crypto-friendly city. It wants to stand out against places like Singapore and Dubai. Regulators have been adding new rules for the sector in recent years. For example, spot Bitcoin exchange-traded funds (ETFs) were approved last year. Also, a system for stablecoin issuers will begin on August 1, 2025.
Dr. Eric Yip, who is the SFC’s Executive Director of Intermediaries, shared his thoughts. He said that for Hong Kong to have a strong and trusted digital asset market, protecting customer assets must always come first. He added that VATPs can use the SFC’s guidance to improve their custody methods, especially as global risks increase.
With these new standards, Hong Kong keeps attracting crypto businesses under a clear rulebook. This is very different from mainland China, where crypto is banned. The SFC believes that keeping assets safe is key to building a competitive market. This is especially true with cyber threats growing.
The news outlet The Block recently reported a jump in crypto security breaches in July. Losses from hacks went up to $142 million. This was 27% more than in June, according to data from PeckShield.