In our institutional newsletter, Crypto Long & Short, we explore recent developments in Asia’s digital asset regulation landscape. Bob Williams from Lockton Companies highlights a growing wave of regulatory measures across key hubs such as Hong Kong, Singapore, and South Korea, which are pushing trading platforms and asset managers to bolster governance structures and review their Directors’ and Officers’ (D&O) liability insurance coverage.
Hong Kong’s Securities and Futures Commission (SFC) released a circular in August 2025, clarifying the responsibilities of senior management at licensed virtual asset trading platforms concerning client asset custody. This document underscores expectations around governance, internal controls, and oversight, marking a shift toward personal accountability for directors and senior executives.
A key issue from the SFC’s consultation is whether digital asset service providers can use non-SFC-regulated or offshore custodians. Insurance availability for virtual assets is closely linked to the strength of custody arrangements, including security measures and operational resilience. If alternative custody models are allowed without equivalent standards, firms adhering to Hong Kong’s regulations may face disadvantages, potentially undermining investor protection efforts.
Singapore introduced licensing requirements in 2025 for digital token service providers catering solely to international customers, expanding its regulatory scope under the Monetary Authority of Singapore. These guidelines emphasize the competency and suitability of key individuals as essential criteria. As management’s personal risk exposure increases due to heightened regulatory expectations, D&O insurance becomes vital for safeguarding personal assets against governance-related claims or regulatory actions.
South Korea is advancing a comprehensive digital asset regulation through its proposed Digital Asset Basic Act, introduced in June 2025. The act aims to structure the digital asset market by regulating issuance and trading practices while establishing new governance frameworks for listing and delisting decisions. These impending changes will intensify compliance demands on trading platforms and service providers, highlighting D&O insurance’s role in protecting directors from financial repercussions of alleged regulatory infringements.
Across these regions, regulators are refining complex frameworks to manage digital asset risks, reflecting a global trend toward stricter oversight and increased senior management accountability. Firms must proactively assess their governance structures, custody setups, and insurance programs to protect leadership against emerging liabilities, with D&O insurance becoming integral to responsible risk management.
Haidy Grigsby from the Tennessee Bureau of Investigation discusses how crypto scams increasingly target knowledgeable individuals, including experienced investors and retired professionals. She recounts a case involving a retired trader who fell victim to a scam initiated through seemingly benign online interactions that evolved into a fraudulent trading scheme. The scam used real exchanges for initial steps but led victims to external sites mimicking legitimate platforms, allowing the scammers to control trade outcomes.
The scam’s credibility was bolstered by fabricated profits and small withdrawals funded with stolen cryptocurrency, encouraging further investments. Victims were frequently redirected to new platforms under the guise of mergers or upgrades following law enforcement actions. Convincing victims of their victimization posed significant challenges, as trust in the scammers often persisted.
The FBI’s 2024 data indicates that losses increase with age, reflecting older individuals’ greater accumulated wealth. Victims are advised to gather evidence and report incidents to local authorities, IC3.gov, and Chainabuse.com. Despite ongoing law enforcement efforts, apprehending perpetrators remains challenging.
This week’s headlines underscore continued institutional growth in the crypto sector despite persistent threats like protocol exploits and state-sponsored attacks. Hyperliquid’s HIP-3 has notably scaled from approximately $115 million in its first week (October 2025) to a peak of $17.8 billion per week, with Commodities driving about 60% of its volume.
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