Key Purpose
To ensure that staking services provided by licensed virtual asset trading platforms are conducted safely, transparently, and with robust investor protections, especially for retail clients.
Scope of Staking Services
- Defined as locking client virtual assets into blockchain protocols using proof-of-stake (PoS) mechanisms in return for yield.
- Only available to clients of the platform.
- The platform must always control key withdrawal mechanisms (e.g., private keys, exit messages).
Custody & Safeguards
- Platforms and their associated entities must maintain full possession or control over client virtual assets—third-party custody is not allowed.
- Internal controls must match those for non-staked assets.
- Must implement whitelisted withdrawal addresses, independent verification of staking instructions, and pre-signed withdrawal messages when using third-party validators.
Risk Management
Operators must:
- Detect fraud, errors, or unauthorized actions.
- Prepare for slashing, inactivity, or outages.
- Disclose all material risks such as technical bugs, hacking, legal uncertainties, and unstaking delays.
- Allocate additional resources if required by the SFC.
Client Communication & Transparency
- Clear disclosures required via website and app on:
- Supported assets, returns, lock-up periods, validators, risks, and fees.
- Compensation arrangements for losses (e.g., slashing).
- Clients (except institutional/professional investors) must acknowledge understanding the risks.
- Statements of account must reflect staking activity.
Blockchain Protocol & Validator Assessment
- Token admission committee must review protocols.
- Platforms must:
- Evaluate validator’s tech, security, finances, track record, and insurance.
- Enter into formal agreements with third-party validators.
- Continuously monitor validator performance and solvency.
Recordkeeping & Reporting
- Retain staking-related records for 7 years.
- Must report material non-compliance to the SFC promptly.
- Notify or get prior approval from the SFC for starting/stopping staking services depending on whether clients are retail or professional.