The financial landscape surrounding cryptocurrency is rapidly evolving, prompting various regulatory bodies to enhance their oversight mechanisms. In this context, Hong Kong’s Securities and Futures Commission (SFC) has introduced significant measures aimed at strengthening protections over crypto assets held by trading platforms.
Enhanced Custody Regulations by the Hong Kong SFC Aim to Fortify User Assets
In a recent press release, the SFC announced comprehensive guidelines that establish minimum custody standards for all licensed virtual asset trading platforms (VATPs). These regulations encompass essential practices such as cold storage measures, continuous security threat assessments, and assurances for safeguarding user investments.
This regulatory update is a proactive response to alarming international cybersecurity breaches that have unveiled significant weaknesses in how crypto exchanges manage their wallets. According to recent findings from a cybersecurity analysis, over $3.1 billion was lost to exploitation of vulnerabilities in the first half of 2025 alone.
Earlier, the SFC executed a focused examination of VATPs to assess their defenses against these emerging threats. The findings indicated that while many platform operators had essential control measures in place, some were falling short of the newly articulated expectations.
Additionally, the updated standards are not exclusive to VATPs; all virtual asset custodians must adhere to these guidelines. The SFC emphasizes that these benchmarks will lay the groundwork for adopting more sophisticated custody solutions in the future.
Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, remarked:
For Hong Kong to cultivate a dynamic, enduring, and reputable digital asset ecosystem, the safeguard of client assets must be paramount for all licensed VATPs. They can utilize the SFC’s practical recommendations to enhance their custody practices, particularly in light of heightened global risks.
This regulatory shift follows Hong Kong’s broader endeavor to establish itself as a welcoming jurisdiction for cryptocurrency activities. Recently, the local stablecoin legislation received legislative approval, and implementation commenced earlier this month.
Prominent financial institutions like Standard Chartered, through their partnerships, are keen on securing a stablecoin license under this new framework. However, initial approval for applicants is anticipated to extend until 2026, as reported.
Bitcoin Experiences Decline, Falling Below $118,000
On Thursday, Bitcoin’s market value suffered a setback as it dropped below the $118,000 threshold. The wave of market fluctuations can be partly attributed to remarks made by US Treasury Secretary Scott Bessent, who indicated that the government has no plans to incorporate the cryptocurrency into its Strategic Reserve, opting instead to accumulate it through seized assets.
A few hours after his initial comments, Bessent utilized platform X to clarify that the Treasury remains open to exploring approaches to acquire more Bitcoin that do not affect the budget. The cryptocurrency briefly rebounded following this clarification, but the reprieve was short-lived, as it ultimately retreated to $117,800.
