Hong Kong SFC Tightens Crypto Custody Rules After Global Security Incidents

Key Points

1. The SFC issued new guidance for crypto custody, setting minimum requirements for wallet management and preparing the industry for advanced custody technologies under its 'ASPIRe' initiative.

2. Global crypto losses reached $2.47 billion in the first half of 2025, with wallet-related breaches accounting for $1.7 billion, highlighting the urgency for regulatory intervention.

3. Infrastructure attacks, particularly targeting centralized exchanges, dominated 80% of stolen funds, often due to compromised private keys and inadequate access controls.

4. Hong Kong has licensed only 11 virtual asset platforms as of July 30, 2025, with over 40 companies submitting stablecoin license inquiries ahead of new regulations.

5. Recovery efforts have been minimal, with only 4.2% of stolen funds returned, and legal frameworks have struggled to keep pace with the speed and sophistication of attacks.