- Hong Kong’s financial regulator has introduced new rules for digital asset trading platforms to protect customer funds.
- Platforms must now use offline cold wallets, air-gapped devices, and whitelisted addresses.
- A separate proposal would require licensing for virtual asset custodians and tools controlling client assets.
- New standards respond to major security incidents at overseas crypto exchanges that led to significant losses.
- Rules take effect immediately, with further licensing changes planned for public comment until August 29, 2025.
The Hong Kong Securities and Futures Commission (SFC) released strict new custody requirements for companies licensed to provide digital asset trading services on Friday. These regulations, effective immediately, are aimed at improving the protection of client assets following a series of Cybersecurity breaches in foreign cryptocurrency exchanges over the past year.
The SFC now requires all platforms to use robust cold-wallet systems—devices that remain disconnected from the internet to prevent Hacking. Other measures include mandatory air-gapped hardware, strict address whitelisting so only approved wallets can receive funds, third-party assessments, and enhanced employee training to prevent unauthorized transactions.
“The new rules are intended to foster a competitive, sustainable and trusted digital asset ecosystem,” said Dr. Eric Yip, executive director of intermediaries at the SFC, in a statement. According to the SFC’s circular, multiple security incidents overseas led to “substantial client losses” due to wallet-system weaknesses and insufficient controls.
The commission outlined that any third-party wallet provider must also meet strict oversight criteria. There will be constant monitoring and verification of transactions around the clock. Additionally, rules require independent checks to prevent “blind signing,” when a transaction is approved without fully reviewing the details.
A separate proposed regulation would require anyone safeguarding virtual assets or the digital keys used to transfer these assets to be licensed. This regime will also cover standalone custodians, not just trading platforms.
The SFC will soon submit a bill introducing these requirements, along with transitional arrangements and a user-pays fee model. Public comments on the custodian licensing proposal are accepted through August 29, 2025. These updates follow a regulatory plan announced in February and the August rollout of a stablecoin licensing scheme, as Hong Kong seeks to strengthen its digital asset sector’s global position.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Crypto Leaders Urge Trump to Block Bank Fees on Customer Data Access
- US May Expand Strategic Bitcoin Reserve Despite Mixed Signals
- Justin Sun Sues Bloomberg Over Disclosure of Crypto Wealth Details
- Ethereum Price Prediction: Will ETH Reach $5K by 2025?
- CrossC2 Enables Multi-Platform Cobalt Strike Attacks on Linux Servers
