Catenaa, Monday, August 18, 2025- Hong Kong’s Securities and Futures Commission has ordered licensed crypto exchanges to strengthen custody practices after overseas failures exposed client risks.
The regulator said the new standards take immediate effect and will apply to all licensed virtual asset trading platforms.
The rules require firms to review asset storage and tighten oversight across several areas.
These include senior management accountability, cold wallet infrastructure, third-party wallet controls and real-time monitoring of security threats.
The regulator said the measures are meant to prevent losses and reinforce investor protection.
The announcement followed a targeted review earlier this year, which found weaknesses in exchanges’ safeguards against cyberattacks.
The regulator’s move also comes after global crypto-related hacks in July caused an estimated $142 million in losses, according to blockchain security firm PeckShield.
Officials said the tighter custody standards will also set expectations for dedicated virtual asset custodians.
Industry experts believe only larger operators with advanced systems will be able to comply, which could consolidate the market.
Hong Kong has introduced a licensing system for exchanges as part of its strategy to attract digital asset businesses, even as mainland China continues to ban trading and mining. On August 1, a new licensing regime for stablecoin issuers also came into effect, underscoring Hong Kong’s bid to build a regulated hub for crypto finance.
