Hong Kong's financial sector is setting sail into the crypto sea, but the question of who's at the helm remains. The Hong Kong Securities & Futures Professionals Association (HKSFPA) is proposing a unique solution: a self-regulatory committee formed by crypto firms themselves.

This proposal comes with the goal of striking a balance between fostering innovation and maintaining compliance. The HKSFPA argues that the current system, focused heavily on supervision, stifles industry growth. Their recommendation? Empower the industry by delegating licensing power to a committee comprised of experts from various financial sectors, including virtual assets.

This approach isn't without its critics. Lithuania, a nation that initially granted licenses to hundreds of crypto firms with minimal oversight, is now tightening regulations due to recent compliance issues. However, Hong Kong seems to be taking a more measured approach, recently approving the first spot Bitcoin and Ethereum ETFs.

The proposed self-regulatory committee would be tasked with monitoring compliance within the crypto industry. This raises the question: can an industry-led committee effectively enforce regulations and prevent the pitfalls seen in Lithuania?

While some in the crypto community see this as a positive step, others remain cautious. Restricted access for mainland China investors, a significant market segment, casts doubt on the overall success of these ETFs.

Hong Kong's proposed approach to crypto regulation is a bold experiment. Whether self-regulation can ensure a smooth journey for the city's burgeoning crypto industry remains to be seen. Only time will tell if this self-charted course leads to a thriving crypto hub or faces the choppy waters of unforeseen challenges.