Hong Kong Issues Circular on Crypto Custody

On February 20, the HKMA sent letters to the heads of authorized institutions (AIs), addressing the topics of tokenization and custodianship of digital assets.

The letters set out standards for custodial services, which the AIs are expected to comply with whether the assets are acquired through standalone services or other activities.

In addition, the HKMA stated that AIs must consult with them beforehand and demonstrate that they meet the expected standards listed in the accompanying annex.

The annex outlines eight categories of standards, which are broad in nature and emphasize the need for senior management and staff involved in custodial activities to possess the necessary knowledge and expertise.