Hong Kong SFC Enforces Stricter Crypto Custody Rules as Hacks Surge

• Hong Kong implements new custody standards to enhance investor protection.
• Key measures include cold storage, senior management accountability, and real-time cybersecurity.

On August 15, 2025, The Block reported that Hong Kong's Securities and Futures Commission (SFC) has introduced updated regulations designed to improve the security of client assets held by licensed cryptocurrency exchanges. These stricter custody standards are effective immediately and serve as a cornerstone of Hong Kong’s broader initiative to bolster its crypto asset infrastructure.

The SFC's move comes in response to rising security breaches in global markets, which revealed critical vulnerabilities and led to substantial financial losses for investors. Earlier this year, a focused review by the SFC uncovered deficiencies within the cybersecurity frameworks of certain licensed platforms, reinforcing the need for enhanced oversight.

The updated guidelines encompass four key areas: senior management accountability, implementation of cold wallet infrastructure, supervision of third-party wallet integration, and continuous cybersecurity monitoring. The measures seek to establish a unified, high-security framework for virtual asset custodians, safeguarding client funds and boosting investor confidence.

This regulatory action underscores Hong Kong’s proactive stance in cultivating a secure environment for digital asset businesses. The approach stands in stark contrast to mainland China's strict prohibitions on crypto trading and mining. Hong Kong appears determined to position itself as a global hub for cryptocurrency enterprises while maintaining robust regulatory controls.