Hong Kong Tightens Crypto Custody Rules: Smart Contract Ban & Rigorous Security Measures

Hong Kong’s securities regulator has enacted new regulations for cryptocurrency custody, introducing stricter security standards and prohibiting the use of smart contracts in cold storage systems. The rules require licensed platforms and custodians to employ robust measures including certified hardware security modules, air-gapped key-signing environments, and 24/7 monitoring of wallets, networks, and infrastructure. 8Stricter accountability for firms will be implemented with direct responsibility for custody practices falling on senior management.