A new wave of digital asset regulations across Asia is putting pressure on trading platforms to strengthen governance—and revisit their Directors’ and Officers’ (D&O) liability insurance.
In recent months, three leading digital asset hubs–Hong Kong1, Singapore and South Korea–have announced plans to refine their respective regulatory frameworks. In the fast-changing digital asset ecosystem, platform operators need to stay informed about the latest regulatory updates and assess their existing D&O insurance program.
Hong Kong: Setting Clear Responsibilities for Senior Management
On August 15, Hong Kong’s Securities and Futures Commission issued a circular (opens a new window) to licensed virtual asset trading platform operators regarding the custody of client virtual assets.
It outlines the expected standards for senior management's responsibilities, including implementing effective policies and internal controls as well as ensuring adequate oversight of suitably qualified individuals. The SFC’s circular signals a shift toward personal accountability, with senior management expected to implement robust controls and oversight.
Directors and managers could be held accountable for their business decisions. D&O insurance can cover, depending on policy wording, expenses related to interviews or document production during regulatory investigations. Without D&O insurance, company executives have to pay for incurred costs out of their own pocket.
Singapore: Ensuring Competency of Key Individuals
Starting from June 30, digital token service providers serving only overseas customers must obtain a license from the Monetary Authority of Singapore.
According to the licensing guidelines (opens a new window), the competency of key individuals is one of the admission criteria that applicants must fully fulfil and demonstrate. The guidelines state that senior management needs to understand the regulatory framework for digital token service providers in the city-state. Furthermore, they should exercise effective oversight and control over business activities and staff.
As mentioned in the last section, D&O insurance can protect the financial assets of senior management arising from claims made against them.
South Korea: Gearing up for Digital Asset Basic Act
In comparison, the scope of regulatory reform in South Korea is far greater than that of Hong Kong and Singapore. On June 10, a lawmaker from the ruling party introduced a bill known as the Digital Asset Basic Act to the National Assembly, which aims to institutionalize the country’s digital asset market.
The bill contains regulations regarding digital asset issuance, trading practices, and distributions. The proposed formation of a trading support eligibility review committee will be tasked to review the listing and delisting of a digital asset.
With these imminent changes, trading platforms based in South Korea could be more susceptible to potential rule breaches. If they do not have D&O insurance in place, it is highly recommended that they consider becoming insured. D&O insurance provides liability coverage to organizations and their directors and officers in the event of legal action.
Navigating Regulatory Complexity with D&O Insurance
The digital asset space is constantly evolving, and so are the regulatory regimes. Authorities in Hong Kong, Singapore, and South Korea are enhancing their already well-established regulatory frameworks. These developments are not limited to local jurisdictions—they signal a broader trend of intensifying global regulatory scrutiny. Firms in the region must proactively review their D&O arrangements to ensure leadership is protected from emerging liabilities.
Lockton Is Here to Help As regulations tighten, the risks to leadership grow. Lockton’s Emerging Asset Protection (LEAP) team across Asia and the world is ready to help firms navigate these changes and secure the right D&O cover. We know how to solve these challenges—reach out today.
Contact the global LEAP (opens a new window) team or for more information, visit the Digital Asset Insurance (opens a new window) page!
