Hong Kong Bolsters Crypto Custody with New HKMA Guidelines

Guidance for Digital Asset Custody

Hong Kong is stepping up its game in the cryptocurrency world with the Hong Kong Monetary Authority (HKMA) issuing new guidelines for institutions providing digital asset custody services. This move is part of an effort to establish the territory as a leading crypto hub once again.

Risk Management Focus

The 11-page 'Expected Standards' document emphasizes a risk assessment and management approach for authorized institutions. They are required to conduct a thorough risk analysis and develop robust policies to handle the risks identified. Moreover, the governance of these processes must involve both the board and senior management.

Ensuring Security and Compliance

Following recent industry upheavals, the guidelines also address the necessity of segregating client assets and bolstering security measures. Institutions must seek to minimize risks associated with theft, fraud, or other malpractices. Additionally, the HKMA mandates that private keys be secured within Hong Kong and requires institutions to make records available upon request.