Hong Kong's Central Bank Issues Guidance for Firms Offering Crypto Custodial Services
The Hong Kong Monetary Authority (HKMA) has issued guidance for institutions interested in offering digital asset custody services. The guidance supplements the licensing regime introduced last year for crypto exchanges. The HKMA requires institutions to conduct a comprehensive risk assessment and implement policies to manage identified risks, overseen by the board and senior management. Institutions are also expected to allocate adequate resources to custodial activities and implement effective disaster-recovery arrangements. The guidance follows the collapse of FTX, Terra, and Three Arrows, and aims to protect customers from inadequacies in the digital asset industry. Other requirements include conducting independent systems audits, storing a substantial portion of client digital assets in cold storage, securing private keys within Hong Kong, and providing all records to HKMA upon request.
