Crypto Long & Short — Asia’s digital-asset crackdown gets personal
Welcome to this week’s institutional briefing from Crypto Long & Short. Regulatory pressure across Asia is shifting accountability from firms to the people who run them — and it’s forcing trading platforms, asset managers and their insurers to rethink governance, custody and Directors & Officers (D&O) cover.
Expert snapshot — Bob Williams, Lockton Companies (Asia/Pacific)
A tightening regulatory wave in Hong Kong, Singapore and South Korea is raising expectations of senior management and exposing directors and officers to greater personal liability. Firms operating in the region must reassess custody models, governance frameworks and insurance programs to keep pace.
Hong Kong: custody rules sharpen personal accountability
In August 2025 the SFC issued a circular to licensed virtual-asset trading platforms clarifying senior management’s duties around custody of client assets. The guidance reinforces governance, internal controls and hands‑on oversight — a clear nudge toward personal accountability for executives.
A current SFC consultation is considering whether virtual‑asset managers may use non‑SFC‑regulated or offshore custodians. That shift would have big insurance implications: coverage for crypto risks today is closely linked to the prescriptive standards required of SFC‑regulated custodians. If alternative custody models are allowed, regulators and the market will need to ensure equivalent security, operational resilience and insurance standards; otherwise firms that invested to meet Hong Kong’s rules risk losing competitive parity and investor protection could suffer.
Singapore: competency, fitness and D&O exposure
In 2025 Singapore extended licensing to digital token service providers that serve only overseas customers, expanding the Monetary Authority of Singapore’s perimeter. A core admission test is the fitness and competency of key individuals — senior managers must demonstrate regulatory knowledge and effective oversight.
As expectations for senior leadership rise, so does personal exposure. D&O insurance is now a central plank of risk management, protecting executives’ personal assets from claims and regulatory actions tied to alleged governance or oversight failures.
South Korea: the Digital Asset Basic Act and broader obligations
In June 2025 lawmakers introduced the Digital Asset Basic Act to the National Assembly. The draft law aims to formalize markets by regulating issuance, trading and distributions and by creating new governance rules for listing and delisting decisions.
If enacted, the bill will raise compliance obligations across trading platforms and service providers. D&O insurance will become even more important to shield directors and officers from the financial fallout of investigations, legal actions or alleged regulatory breaches.
Practical takeaway
Across Hong Kong, Singapore and South Korea, regulators are deepening already-sophisticated frameworks to manage digital-asset risk. That trend mirrors a global move toward tougher scrutiny and clearer personal accountability for senior management. Firms should proactively review governance, custody arrangements and insurance — treating D&O cover not as an afterthought but a core component of responsible risk management.
Informed Perspectives — Haidy Grigsby, Tennessee Bureau of Investigation
Crypto frauds are not just targeting the inexperienced. Sophisticated cons are increasingly ensnaring retirees, former market participants and seasoned investors using social engineering and “pig butchering” tactics.
Typical playbook:
- Initial contact via a wrong-number text, LinkedIn or social outreach that morphs into a professional or romantic rapport.
- Victims are moved to encrypted apps (e.g., WhatsApp) and encouraged to use real exchanges and self‑custody wallets accessed through Web3 browsers — often without realising they’ve left the trusted app environment.
- Scammers direct victims to fake trading sites that simulate real markets but allow a contrived single daily trade. Victims see fabricated gains; small test withdrawals are paid out using other victims’ funds to build confidence.
- When larger withdrawals are requested, scammers invent regulatory holds, tax prepayments or liquidity checks and demand more funds. Sites frequently change domains or branding — explained as mergers or upgrades, but often a response to law enforcement action.
A recent case involved a retired trader who lost his life savings after being convinced he was acting as a consultant on a legit trading scheme. By the time law enforcement convinced him he’d been defrauded, funds had been laundered and liquidated. The FBI’s 2025 IC3 report documents similar trends and shows losses rising with age — older victims typically have larger amounts at risk.
If you suspect you’ve been targeted: stop all communication, preserve evidence (messages, account details, screenshots) and report to local law enforcement, IC3.gov and Chainabuse.com.
This week’s headlines — Francisco Rodrigues
Institutional adoption continues to climb, but risks persist: protocol exploits, state‑sponsored attacks and tech disruptions remain active threats.
Chart of the week
Hyperliquid’s HIP-3 launched in October 2025 at about $115 million weekly volume and scaled rapidly to a peak of $17.8 billion/week. Today it consistently accounts for roughly 35–40% of the protocol’s volume. Despite its crypto branding, HIP-3 is predominantly a TradFi venue: Commodities drive about 60% of its volume while pure crypto categories make up ~12%. Aggregate protocol volume (core + HIP-3) has fallen since a March 2026 peak, and the HYPE token price has tracked that downtrend.
Want more?
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Disclaimer
Views expressed here are those of the authors and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or affiliated entities. Sources include the SFC circular (Aug 2025), MAS licensing updates (2025), the Digital Asset Basic Act proposal (June 2025), and the FBI IC3 2025 Internet Crime Report (p. 53).
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