Hong Kong regulators have taken a step towards self-regulation within the city’s cryptocurrency industry. The Hong Kong Securities & Futures Professionals Association (HKSFPA) recently recommended that crypto firms establish a self-regulatory committee tasked with monitoring compliance among industry players.

This recommendation comes as Hong Kong wants to maintain its position as a global financial hub. The HKSFPA believes the current financial market is “too focused on supervision” and lacks an organization dedicated to fostering industry growth.

Self-regulation would empower crypto firms to develop their own set of rules and best practices, ensuring a level of standardization and potentially accelerating innovation within the Hong Kong crypto space. This approach aligns with the city’s reputation as a business-friendly environment.

However, some experts express concerns about the effectiveness of self-regulation, particularly in a nascent industry like cryptocurrency. They argue that a lack of strong oversight could increase the risk of fraud and manipulation within the market.

The Hong Kong Securities and Futures Commission (SFC) is expected to retain its power to supervise market conduct. The future structure might involve a split licensing power, with the SFC solely handling securities and a self-regulatory body overseeing the crypto industry.

This development comes as a welcome sign for some crypto enthusiasts in Hong Kong, who view it as a step towards a more embracing regulatory environment for digital assets. However, it remains to be seen how this self-regulatory framework will be implemented and whether it will strike the right balance between fostering innovation and protecting investors.