The Hong Kong Securities and Futures Commission (SFC) has announced new crypto custody rules impacting licensed exchanges and their security practices.
New Crypto Custody Requirements
The Hong Kong SFC has enforced stringent new standards for crypto custody focused on cold wallet security for licensed exchanges. The use of certified hardware security modules and 24/7 security operations centers is now mandatory.
Impact on Crypto Exchanges
The introduction of new rules may compel exchanges to shift to compliant security practices, potentially increasing their operational costs. These changes primarily affect licensed exchanges in Hong Kong dealing with cryptocurrencies such as ETH, BTC, and altcoins.
Goals and Consequences of the Changes
The aim of the changes is to enhance trust among institutional investors and align with global security standards. The long-term goal is to attract capital, but increased costs may impact market flows. Major changes in crypto asset storage could lead to initial disruptions followed by stability.
SFC's new rules could significantly reshape the investment landscape for cryptocurrencies in Hong Kong by enhancing security and attracting more institutional investors to the space.
