Hong Kong’s SFC Tightens Crypto Grip: New Custody Rules Unveiled 🛡️💰

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In a world where the digital coin dances to the tune of whims and fancies, the Hong Kong Securities and Futures Commission (SFC) has decided to play the part of the stern governess, laying down the law for the licensed crypto platforms. It seems the tales of financial misadventures from distant lands have finally reached the ears of our vigilant regulators, prompting them to act before the wolf knocks on the door. 🐺

  • The Hong Kong Securities and Futures Commission, with the wisdom of Solomon, has decreed new mandatory custody standards for the crypto realm.
  • Service providers are now tasked with the sacred duty of applying stringent governance and security measures to protect the sacred funds of their patrons.
  • The new edicts demand a fortress-like cold wallet infrastructure, iron-clad withdrawal controls, and an ever-vigilant eye on cybersecurity threats, all to thwart the cunning schemes of modern-day pirates. ⚔️

Service providers must appoint a noble ‘Responsible Officer or Manager-in-Charge’ to oversee the custody operations, ensuring that the kingdom’s laws of governance, internal controls, risk management, and compliance are upheld.

  • Robust Cold Wallet Infrastructure: Private keys shall be forged in secret sanctuaries, using certified hardware security modules (HSMs) and fortified with backups. The SFC demands thorough vetting of HSM providers, continuous maintenance of patches and certifications, and the avoidance of public smart contracts to minimize the risk of breaches.
  • Secure Wallet Operations: To safeguard against the thievery of assets, strict withdrawal protocols must be enforced. Withdrawals shall only be made to approved addresses, with multiple layers of verification, clear division of responsibilities, and the use of air-gapped signing devices to thwart any attempts at tampering or insider treachery.
  • Strict Oversight of Third-Party Wallet Providers: Should a VATP entrust its treasures to an external keeper, the same rigorous standards of security and governance must be applied. External solutions must undergo thorough due diligence, independent code reviews, and regular disaster recovery drills, with administrative access tightly controlled.
  • Real-Time Threat Monitoring: A Security Operations Centre must be established to monitor incidents in real time, track balances, unauthorized access, and adapt alerts to emerging threats, much like a sentinel keeping watch over the city walls.
  • Staff Training and Creation of Awareness: All personnel involved in custody must undergo specialized security training, including simulations of phishing attacks and exercises to prevent blind signing, to strengthen the human defenses against the dark arts.

    • These requirements are to be implemented forthwith, with VATPs expected to reassess and enhance their custody frameworks. This new mandate aligns with Hong Kong’s grand vision to become a beacon of the digital age, a haven for those who seek to navigate the turbulent waters of the crypto world. 🌐

    Just as the first stablecoin bill in Hong Kong’s history took effect on the 1st of August, paving the way for a licensing regime for issuers, so too does the government continue to refine its policy statement on digital assets, emphasizing the importance of regulatory clarity and domestic adoption.

    Thus, Hong Kong stands tall among the most crypto-friendly territories in Asia, steadfast in its mission to secure its place on the global stage. 🌟

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    2025-08-15 15:30