The proposal put forth by the Hong Kong Securities & Futures Professionals Association (HKSFPA) to establish a self-regulatory committee within the city’s crypto firms reflects a growing trend towards industry-led compliance monitoring. The HKSFPA’s recommendation aims to address the absence of an overarching organization to foster the development of Hong Kong’s financial market industry while also balancing the need for supervision with industry-wide coordination.

The suggestion to delegate licensing powers to industry players, while retaining supervision over market conduct with the Securities & Futures Commission (SFC), aligns with the goal of maintaining Hong Kong’s competitiveness in the global securities market. By empowering the securities industry to oversee licensing, the proposal seeks to streamline regulatory processes and foster a more responsive regulatory environment.

However, the efficacy of self-regulation in maintaining a balanced risk-reward dynamic remains a subject of debate, as seen in recent developments in Lithuania. While Hong Kong regulators have exhibited greater tolerance towards virtual asset firms compared to other jurisdictions, such as the recent approvals of spot Bitcoin and Ethereum ETFs, challenges remain in ensuring effective oversight and compliance within the crypto sector.

The approval of spot Bitcoin ETFs by the Hong Kong Securities and Futures Commission (SFC) marks a significant milestone for the region’s crypto industry. These ETFs, which allow new ETF shares to be issued using BTC and ETH, offer investors exposure to digital assets through traditional financial instruments. While the approval has garnered praise, there are concerns about the eligibility of mainland China investors to purchase Hong Kong-listed spot Bitcoin and Ether ETFs due to regulatory restrictions.

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Overall, the developments in Hong Kong’s crypto industry underscore the importance of striking a balance between fostering innovation and ensuring regulatory compliance. The establishment of a self-regulatory committee could represent a step towards achieving this balance by empowering industry stakeholders to play a more active role in oversight and compliance efforts.

Source: cryptonews.com

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