Share this article
Hong Kong's Central Bank Issues Guidance for Firms Offering Crypto Custodial Services
The HKMA wants authorized institutions to undertake a comprehensive risk assessment followed by appropriate policies to manage identified risks.
Updated Mar 8, 2024, 9:47 p.m. Published Feb 20, 2024, 3:09 p.m.
- Hong Kong's central bank issued guidance for firms interested in offering custodial services for digital assets.
- Among the requirements, the HKMA wants firms to hold clients' digital assets in client accounts segregated from the firm's own assets in the event of an insolvency.
Hong Kong's central bank issued guidance for authorized institutions interested in offering custody services for digital assets as the territory attempts to reclaim its title as a crypto hub.
The Hong Kong Monetary Authority (HKMA) guidance issued Tuesday adds to the licensing regime introduced last year that gives crypto exchanges a pathway to operate in a regulated manner.
STORY CONTINUES BELOW
In the 11-page "Expected Standards" document, the HKMA says it wants authorized institutions to undertake a comprehensive risk assessment followed by appropriate policies to manage identified risks. The entire process should be overseen by the board and senior management.
The central bank also wants the sector to allocate adequate resources, including manpower and expertise, to custodial activities so it can manage conflicts of interest that may arise and implement effective disaster-recovery arrangements to ensure business continuity.
The collapse of FTX, Terra, and Three Arrows have led authorities to frame regulations or guidance to protect customers from inadequacies in the digital asset industry. The HKMA document says firms should hold clients' digital assets in separate accounts segregated from the firm's own assets in the event of insolvency. Companies should prevent the use of client assets for the firm's accounts.
The HKMA also wants the institutions offering custody services to minimize "the risk of loss of client digital assets due to theft, fraud, negligence or other acts of misappropriation, as well as delayed access or inaccessibility of client digital assets."
Some of the other major guidance requirements are to conduct independent systems audits, store a substantial portion of client digital assets in cold storage, ensure that private keys are secured within Hong Kong and provide all records to HKMA whenever requested.
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
SEC Approves U.S.’ Second Crypto Index ETP with Bitwise’s BITW
The Bitwise 10 Crypto Index Fund now trades on NYSE Arca, joining the ranks of gold and oil funds in regulated exchange products.
What to know:
- The Bitwise 10 Crypto Index Fund (BITW) has received SEC approval to trade as an exchange-traded product on NYSE Arca.
- BITW offers diversified exposure to the 10 largest cryptocurrencies, including Bitcoin and Ether, and is rebalanced monthly.
- This approval marks a significant milestone for crypto indices, potentially attracting more institutional investment.
Top Stories
