Hong Kong Monetary Authority issues guidelines for companies providing cryptocurrency custody services
The Hong Kong Monetary Authority (HKMA) has issued guidelines stating that in order to ensure that the digital assets held by recognized institutions are fully protected and the risks involved are properly managed, it is necessary for the regulator to provide guidance on the provision of digital asset custody services by recognized institutions. Referring to international standards and practices, the HKMA has set out expected standards (including governance and risk management, segregation of customer digital assets, protection of customer digital assets, delegation and outsourcing, etc.) to provide recognized institutions with flexibility in arranging operations that are appropriate to the nature, characteristics and risks of custody of digital assets. Recognized institutions should apply these standards to protect customers' digital assets, whether they are received as intermediaries in virtual asset (VA) related activities, distributed tokenized products, or provided as independent custody services.
In addition to the expected standards specified in the attachment, recognized institutions providing digital asset custody services should also comply with all applicable laws and regulatory requirements. If the authorized institution itself or its affiliated institution (locally registered recognized institution) intends to provide digital asset custody services, it should discuss with the HKMA in advance and prove that it meets the expected standards and requirements set out in this circular. Recognized institutions or subsidiaries of locally registered recognized institutions that are already engaged in digital asset custody activities should review and modify their systems and control measures as needed.
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