Hong Kong authorities recommend self-regulation of the city’s crypto industry
The Hong Kong Securities and Futures Professional Association (HKSFPA) has recommended that the city's crypto companies establish a self-regulatory committee and monitor each other for compliance.
“Hong Kong's financial market industry is focused on supervision,” the HKSFPA said in a recommendation letter issued on April 22, “but there is no organization that oversees the overall development of the industry.”
The governing body further stated the need for Hong Kong to remain competitive in the global securities market and “strengthen its status as a global financial centre”. Outlining the next steps, the HKSFA recommended the creation of the city's regulator, the Securities and Futures Commission (SFC), a “statutory self-regulatory” and autonomous body that would instead hand over licensing powers to industry players:
“In the case of Hong Kong, the Commission recommends that the Securities and Futures Commission still retains the power to regulate market behavior, but distributes the licensing power only to the securities industry, a self-regulatory institution consisting of the futures industry, asset management industry and virtual asset industry.”
In a similar letter of support last August, the HKSFPA spoke of “balanced regulation and development” that would prevent Hong Kong's virtual resources industry from “moving in the direction of extreme surveillance.”
That said, self-regulation does not always come with a balanced risk-reward dynamic.
For one, Lithuania is tightening its crypto regulations starting in 2025 after reports of compliance failures and abuses. The Baltic country has licensed more than 580 crypto companies and currently has little control over its licensors.
However, Hong Kong regulators have been more tolerant of virtual property companies than their counterparts in other parts of the world.
On April 15, the SFC approved space for bitcoin and ether exchange-traded funds for issuers including Harvest Fund Management, Bosera Asset Management and ChinaAMC. Last year, the regulator granted official virtual asset licenses to crypto exchange Hashkey and OSL.
Meanwhile, the US Securities and Exchange Commission has not yet approved the Spot Ether ETF or licensed certain crypto exchanges to register. Also, the outlook for their endorsements is dire right now.
Related: Hong Kong Investment Firm Reveals Bitcoin and Ether ETF Fees
