The Hong Kong Securities and Futures Fee (SFC) issued instantly efficient steerage on cryptocurrency custody requirements, introducing sweeping safety necessities and a ban on good contracts in chilly pockets implementations.
In a round launched on Friday, the regulator outlined prescriptive controls for licensed custodians of digital belongings. They embrace requiring a licensed {hardware} safety module, permitting withdrawals solely to whitelisted addresses and sustaining a 24/7 safety operations middle to watch techniques, networks, wallets and infrastructure.
The surroundings the place personal keys are used to signal transactions also needs to be air-gapped and bodily secured, with keys being generated and stored offline. The regulator advisable “strict multi-factor bodily entry management.”
“Going ahead, these requirements may even represent core expectations for the suppliers of Digital Asset Custodian Companies, and assist to foster a constant framework for digital asset custody throughout the trade,” the round mentioned.
Associated: Animoca and Commonplace Chartered type stablecoin enterprise in Hong Kong
No good contract for chilly wallets
Some of the placing adjustments is a ban on good contracts in chilly wallets. The round states that “chilly pockets implementations mustn’t embrace good contracts on public blockchains to minimise potential on-line assault vectors related to on-chain good contracts.”
Good contracts are extensively utilized by institutional custodians for each cold and hot wallets. BitGo, for instance, makes use of Ethereum good contracts which can be optimized for each cold and hot wallets and beforehand outlined its smart-contract multisig mannequin for account-based chains.
Secure, beforehand often known as Gnosis Secure, is one other good contract-based custody resolution, with a Messari report stating it held $72 billion in over 25 deployed good accounts as of the third quarter of 2024.
US-based publicly traded crypto change Coinbase known as Secure “the main supplier” of multisig companies in March 2024, underscoring the potential trade pushback to Hong Kong’s transfer.
Associated: Hong Kong stablecoin shares slide as new guidelines take impact, consultants see wholesome reset
Hong Kong builds a crypto hotspot
Hong Kong is rising as Asia’s crypto hotspot by transferring rapidly on guidelines and market entry. Regulators authorised and launched spot Bitcoin and Ether ETFs in April 2024, giving establishments a compliant option to achieve publicity, and laid out the ASPIRe roadmap in February to widen entry whereas tightening safeguards throughout custody, merchandise and market construction.
On the identical time, the particular administrative area of China retains increasing its licensed change roster and locking in a full stablecoin regime. Extra digital asset buying and selling platform licenses had been added in late 2024, and Hong Kong’s stablecoin regulation grew to become efficient on Aug. 1, with a forthcoming public registry of licensed issuers.
Journal: Hong Kong hoses down stablecoin frenzy, Pokémon on Solana: Asia Specific
