Ray Law | Senior Security Solution Architect
Hong Kong is fast becoming a global hub for Web3 and digital assets. However, as interest from banks, stablecoin issuers, and crypto trading platforms grows, so does the need for clear rules and strong protections. In response, Hong Kong regulators have introduced new laws and guidelines to ensure digital assets are properly secured and risks are well managed.
Hong Kong’s Path to Digital Asset Regulation
The Stablecoins Bill, passed in May 2025, is the most recent example of these increased regulatory efforts. The Ordinance is expected to come into effect on 1st August 2025, after which the Hong Kong Monetary Authority (HKMA) will begin accepting licence applications. It created a licensing regime for fiat-referenced stablecoin (FRS) issuers and sets strict rules around asset reserves, redemptions, and cybersecurity. Alongside this bill, the HKMA and the Securities and Futures Commission (SFC) have issued guidance that covers:
- How to safely store and back up private keys as well as wallet access credentials
- What’s expected when using blockchain
- How trading platforms should handle client assets and secure their operation
Meeting these standards is essential for organizations seeking to do business in Hong Kong’s burgeoning digital asset market. This is where Thales comes in.
How Thales Supports Compliance and Security for Digital Assets
Protecting Private Keys and Wallet Access
Private keys and wallet seeds are the gateway to digital assets. Their being lost or compromised can mean losing everything. As such, Hong Kong regulators require them to be stored in secure, tamper-resistant environments.
Thales Hardware Security Modules (HSMs) do precisely that:
- They generate, store, and protect private keys inside a certified, physically secure device.
- Multiple partitions allow organizations to have wallets with different cryptocurrencies in one HSM with a logically separated design.
- They support major blockchain standards and cryptographic algorithms, including BIP32 and SLIP-0010, as well as the SECP256k1 and Ed25519 curves used in Bitcoin, Ethereum, and Solana.
- They support both cold and hot wallet environments for cryptocurrency and digital asset management.
- Access is controlled using multi-factor authentication (MFA) and role-based permissions, with full audit trails to track every action.
- Offline backups can be stored using Luna Backup HSMs, protecting against loss, theft, or disaster.
Together, these measures ensure your digital assets remain secure, compliant, and under your control.
Securing Blockchain Infrastructure
The HKMA encourages banks to explore blockchain-based services like cryptocurrencies and tokenized deposits, but only if they can’t manage the risks. The impending quantum threat is arguably the most pressing of these threats. Thales helps secure Blockchain systems by:
- Keys are generated inside the HSM with high-quality entropy (classical RNG or embedded quantum RNG) and never leave the hardware boundary.
- Private keys remain sealed in hardware; even privileged OS users cannot extract them. Any signing operation sends a request into the HSM, and only the signature exits.
- Multi-factor or split knowledge authentication (multi-part splits) and role-based access prevent unauthorized use. All operations are tracked in secure, tamper-evident audit logs to support compliance and forensic investigation.
- Integration with Blockchain Platforms such as Ethereum and Hyperledger Fabric
These measures ensure you’re not just compliant today but prepared for tomorrow.
Enabling Audit and Reporting
Regulations now require financial institutions and trading platforms to maintain a detailed record of how they access and use digital assets. Again, Thales HSMs make this easy:
- They create cryptographically signed audit logs that can’t be tampered with.
- They integrate with popular SIEM and compliance tools so you can spot issues quickly.
- Real-time dashboards help you track activity and generate reports when needed.
The result? Faster audits, easier reporting, and stronger governance.
Staying Ahead of New Risks
Hong Kong regulators are also keenly aware that threats are evolving and emphasize staying alert to emerging risks, including quantum attacks that could break today’s encryption.
Thales is prepared for these eventualities:
- Our HSMs support post-quantum cryptography, so you can start migrating today.
- Both Luna Network HSM and Backup HSM are FIPS 140-3 Level 3 certified to ensure the highest degree of security.
- We help financial institutions track and manage all cryptographic assets, including keys, algorithms, and who’s responsible for them.
- Our centralized tools simplify crypto-asset inventory management, meaning no more blind spots.
If you’re planning long-term digital asset strategies, this is non-negotiable.
Trusted by the Industry in Hong Kong
Thales isn’t new to digital asset security, and our track record in Hong Kong proves it.
Award-Winning Leadership
We received the Fintech Award 2024 for Outstanding Cybersecurity Solution for Digital Assets in Hong Kong, recognizing our role in helping financial institutions and trading platforms meet regulatory expectations while securing complex blockchain environments.
A Dominant Force in the Local Market
Over 80% of licensed Virtual Asset Trading Platform (VATP) operators in Hong Kong already rely on Thales HSMs to protect client virtual assets and meet SFC-mandated cybersecurity standards. These platforms must meet strict rules around client asset segregation, key protection, and audit logging, areas where Thales solutions are purpose-built to help. Check out our case study to learn more.
What Comes Next?
The Stablecoins Bill is just the start. More rules, more scrutiny, and more innovation are on the way. The HKMA has already said further consultations are coming.
Whether you’re a bank, stablecoin issuer, or crypto trading platform, Thales can help you build a secure, compliant, and future-ready digital asset infrastructure. Because in digital finance, security isn’t just a requirement; it’s the foundation of trust.