The Hong Kong Monetary Authority (HKMA) yesterday released a document outlining its rules for the tokenization and custody of digital assets among authorized institutions in the region.
The 11-page document requires these institutions to conduct comprehensive risk assessments and allocate adequate resources for proper governance and risk management of their crypto custody services.
According to the circular, authorized institutions must also keep clients' assets separate from their own and have contingency and disaster recovery plans in place in order to minimize the risk of loss or theft of clients' digital assets.
The regulator has also highlighted the importance of disclosing all risks associated with crypto custody arrangements and complying with anti-money laundering and anti-terrorist financing regulations.