City officials in Hong Kong advise cryptocurrency industry to adopt self-regulation

The Hong Kong Securities & Futures Professionals Association (HKSFPA) has suggested that crypto firms in the city establish a self-regulatory committee and monitor each other’s compliance. In a recommendation letter dated April 22, the HKSFPA expressed concern about the lack of an organization dedicated to overseeing the overall development of the financial market industry in Hong Kong. The association emphasized the importance of maintaining Hong Kong’s competitiveness in the global securities market and consolidating its position as an international financial center. To achieve this, the HKSFPA proposed that the Securities & Futures Commission (SFC), the city’s regulator, establish statutory self-regulating bodies that delegate licensing powers to industry players. The HKSFPA’s previous recommendation letter in August 2020 also emphasized the need for a balanced approach to supervision and development in the virtual assets industry to prevent excessive regulation. While self-regulation can carry risks, Hong Kong regulators have generally been more accommodating towards virtual asset firms compared to regulators in other jurisdictions. For example, the SFC recently approved spot Bitcoin and Ether exchange-traded funds for several issuers. In contrast, regulators in the US have yet to approve a spot Ether ETF or provide specific licenses for crypto exchanges to register, and the outlook for these approvals remains uncertain.