On August 15, 2025, the Securities and Futures Commission ("SFC") outlined robust custody standards for virtual asset trading platforms ("VATPs") to protect client assets in light of global cybersecurity vulnerabilities. The SFC aims to enhance industry practices under the ASPIRe roadmap.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On August 15, 2025, the Securities and Futures Commission ("SFC") issued a circular to all licensed virtual asset trading platforms ("VATPs") outlining its expectations for robust client virtual asset custody. This directive aims to fortify the industry's transition towards advanced custody technologies in line with the ASPIRe roadmap.
The SFC underscored the necessity for VATPs to bolster their custody practices in light of recent overseas cybersecurity incidents that resulted in substantial client asset losses. Additionally, a targeted review conducted by the SFC earlier in 2025 uncovered weaknesses in some operators' controls.
The circular provides VATPs with examples of best practices and minimum standards, including the responsibilities of senior management, client cold wallet infrastructure, use of third-party wallet solutions, and real-time threat monitoring. These standards will also serve as the benchmark for virtual asset custodians, establishing an effective industry-wide framework for virtual asset custody.
Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, stressed that client asset protection must remain the top priority for all licensed VATPs. The SFC’s practical guide will assist these platforms in enhancing their custody practices to mitigate global risks.
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