A new wave of digital asset regulations across Asia is increasing pressure on trading platforms and asset managers to strengthen governance — and to reassess their Directors’ and Officers’ (D&O) liability insurance arrangements.
In recent months, three leading digital asset hubs — Hong Kong, Singapore and South Korea — have announced plans to refine their respective regulatory frameworks. As regulatory expectations rise and senior management’s personal accountability becomes clearer, platform operators must stay informed of these developments and evaluate whether their existing risk transfer strategies remain fit for purpose.
Hong Kong: expanding accountability beyond governance
In August 2025, Hong Kong’s Securities and Futures Commission (SFC) issued a circular to licensed virtual asset trading platform operators clarifying senior management's responsibilities regarding the custody of clients' virtual assets. The circular reinforces expectations around governance, internal controls and effective oversight, signaling a continual shift toward personal accountability for directors and senior management.
An emerging consideration from the SFC’s consultation process is whether virtual asset management service providers should be permitted to rely on non‑SFC‑regulated or offshore custodians. From an insurance perspective, the availability of coverage for virtual asset risks is closely tied to the robustness of custody arrangements, including security controls, operational resilience and asset protection standards. To date, insurance capacity has largely been supported by the prescriptive requirements imposed on SFC‑regulated custodians and platforms.
If alternative custody models are permitted, ensuring that non‑regulated or offshore custodians are held to equivalent standards, including appropriate insurance coverage will be critical. Without alignment, firms that have invested heavily to meet Hong Kong’s regulatory and insurance expectations may face a competitive disadvantage, while the objective of enhancing investor protection and market integrity could be undermined.
Singapore: reinforcing senior management competency
In 2025, Singapore introduced licensing requirements for digital token service providers serving only overseas customers, bringing a broader range of firms within the Monetary Authority of Singapore’s regulatory perimeter.
Under the licensing guidelines, the competency and fitness of key individuals are core admission criteria. Senior management is expected to demonstrate a clear understanding of the regulatory framework and to exercise effective oversight and control over business activities and staff.
As regulatory expectations rise, so too does the personal exposure of directors and officers. In this context, D&O insurance remains a critical component of a firm’s overall risk management framework, helping to protect personal assets in the event of claims or regulatory actions arising from alleged governance or oversight failures.
South Korea: gearing up for Digital Asset Basic Act
South Korea is pursuing a more expansive regulatory overhaul through the proposed Digital Asset Basic Act, introduced to the National Assembly in June 2025. The bill seeks to formalize the digital asset market by regulating issuance, trading practices and distributions, while introducing new governance structures around asset listing and delisting decisions.
These imminent changes would significantly increase compliance obligations for trading platforms and related service providers. In this environment, D&O insurance plays an important role in protecting directors and officers from the financial consequences of legal actions, investigations or claims arising from alleged regulatory breaches.
Navigating regulatory complexity with D&O insurance
Across Hong Kong, Singapore and South Korea, regulators are refining already sophisticated frameworks to address the evolving risks of digital assets. These developments reflect a broader global trend toward intensified regulatory scrutiny and heightened expectations of senior management accountability.
For firms operating in the region, this means proactively reviewing governance structures, custody arrangements and insurance programs to ensure leadership is appropriately protected against emerging liabilities. D&O insurance is no longer a secondary consideration — it is a core element of responsible risk management in an increasingly regulated digital asset landscape.
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