TechFlow news, the Hong Kong Monetary Authority (HKMA) issued guidance on Tuesday to enhance the licensing regime introduced last year, aiming to ensure that customer digital assets are held in separate client accounts distinct from a company's proprietary assets in the event of bankruptcy. The HKMA stated that authorized institutions should conduct comprehensive risk assessments and then establish appropriate policies to manage identified risks. The entire process should be overseen by the board of directors and senior management.
According to the HKMA document, companies must hold customers' digital assets in separate accounts distinct from their own proprietary assets in case of insolvency. Firms must prevent the use of customer assets for corporate purposes. Other key requirements include conducting independent system audits, storing the majority of customer digital assets in cold storage, ensuring private keys are protected within Hong Kong, and providing all records to the HKMA upon request.
The Hong Kong central bank expects firms to allocate sufficient resources, including personnel and expertise, to custody activities in order to manage potential conflicts of interest and implement effective disaster recovery arrangements to ensure business continuity.
