Hong Kong SFC Tightens Custody Standards for Licensed Crypto Platforms
Hong Kong’s Securities and Futures Commission imposed immediate strengthened custody standards on licensed virtual-asset trading platforms. The circular addressed wallet infrastructure, transaction verification and access controls, directly affecting how Bitcoin and other client assets could be safeguarded on regulated platforms.
On August 15, 2025, Hong Kong’s Securities and Futures Commission issued a custody circular setting minimum standards for licensed virtual-asset trading platforms and their associated entities. The requirements took immediate effect and followed both overseas exchange losses and the regulator’s own review of weaknesses in platform controls.
The SFC focused on operational details that determine whether customer assets can actually be protected: wallet infrastructure, cryptographic key management, approval devices, transaction verification, whitelisting and controls around third-party wallet technology. The regulator specifically warned against practices such as blind signing, in which a transaction is approved without adequately reviewing its contents.
Bitcoin was not the only asset subject to the circular, but custody is a direct Bitcoin issue whenever exchanges hold customers’ BTC. Users who leave Bitcoin with a centralized trading platform depend on the operator’s security architecture rather than their own private-key management. The SFC’s action therefore changed the standards governing a real point of Bitcoin counterparty risk in one of Asia’s major financial centers.
The event also fit Hong Kong’s broader effort to build a regulated virtual-asset market. By tightening custody controls rather than merely expanding licenses, regulators were addressing the infrastructure needed for institutional and retail participation to operate without repeating the wallet failures seen elsewhere.