The Hong Kong Securities and Futures Commission (SFC) has enacted new stringent custody rules for virtual asset platforms, significantly altering the market landscape.
New Custody Requirements
The Hong Kong SFC requires virtual asset platforms to implement strict custody protocols. These new standards aim to secure user assets and involve additional operational controls.
Market Impact and Expert Opinions
Experts suggest that these new requirements will raise the compliance bar for platforms, likely leading to market consolidation as small or new entrants may struggle to meet the financial and infrastructural demands. Ex.io's CEO, Chen Wu, highlighted the importance of these changes in raising custody standards, stating that the shift could act as a barrier to entry for less-established players.
Historical Context and Current Market Situation
Past tightening of regulations in 2025 was also aimed at enhancing the oversight of virtual asset services, resulting in significant market consolidation favoring well-capitalized exchanges. Currently, Bitcoin trades at $117,864.58, reflecting slight price volatility.
The introduction of strict custody regulations in Hong Kong is expected to change market dynamics and enhance safety standards, though it will raise the barrier to entry for new participants.
