IOSCO Unveils First Global Approach to Crypto Asset Regulation

Global policy forum IOSCO on Tuesday released the first global approach to crypto asset and digital market regulation.

On Tuesday, the International Organisation of Securities Commissions (IOSCO) unveiled the first global approach to regulating the crypto and digital asset market.

IOSCO announces global crypto regulation recommendations. 📍 Link to the Consultation Report 🔗 https://t.co/Je0UQulWFs📍 Link to Press Release 🔗 https://t.co/gf9qXuYdwE📍 Link to the Crypto-Asset Roadmap 2022/2023 🔗 https://t.co/Rcth0NkMmt#CryptoAssets #Regulation pic.twitter.com/aqXPmUmQJN

— IOSCO Press (@IOSCOPress) May 23, 2023

In a consultation report, the Commission suggests 18 recommendations covering six areas, including cross-border risk and regulatory cooperation, conflicts of interest stemming from the vertical integration of functions and activities, insider trading, fraud, as well as market manipulation, Decrypt reports.

The Commission specifically advised regulators to prohibit crypto firms “from combining certain functions in a single legal entity or group of affiliated entities.”

IOSCO’s report, which outlines policy recommendations for a global approach to crypto and digital asset regulation, comes amid concerns over consumer protection after the collapse of crypto exchange FTX.  

The Commission, a policy forum comprising global regulators such as the US SEC, the UK’s Financial Conduct Authority, and Japan’s Financial Services Agency, oversees 95% of global securities markets across 130 jurisdictions.

IOSCO chair Jean-Paul Servais said in a press release that the recommendations represent a “turning point” in addressing the risks associated with crypto assets such as bitcoin (BTC) and ether (ETH). Servais added:

Crypto business has been allowed to grow on a flawed basis, and it has to be corrected.

LIM Tuang Lee, Chairperson of the IOSCO Board-Level Fintech Task Force (FTF) – set up last year to develop its crypto policy recommendations, said:

“The Recommendations in IOSCO’s Consultation Report set expectations and guardrails to regulate and supervise crypto-asset markets, which are inherently cross-border in nature.

Crypto-asset service providers need to address unacceptable conflicts of interest and take far more seriously the right of clients to have their monies and assets carefully minded and accounted for.

It is time for Regulators to work together across borders and various jurisdictions to ensure that investor protection and market integrity are upheld in crypto-asset markets.”

The watchdog said members of the public have until July 31 to send comments and feedback and aims to finalize standards by the end of the year.

Members of the Crypto Industry React Well to IOSCO’s Recommendations

Members of the community have responded well to IOSCO’s proposed policy framework. In a comment shared with Crypto Daily, Chris Perkins, President, and Managing Partner at CoinFund, said:

“In April, CoinFund released a whitepaper where we put forth ten policy principles for the digital financial system.  As such, we remain fully supportive of principles-based regulation and commend IOSCO for their desire for a globally synchronized approach that seeks to protect client assets, offers reasonable and transparent disclosures, and roots out abusive behaviors. 

We further commend IOSCO for not commingling DeFi in today’s policy paper covering crypto asset service providers (CASPs).  Finally, we are hopeful that subject matter experts, including trade associations, respond to the numerous queries in the proposal in order to help inform the best policy outcomes.  Clearly, as global policies for digital assets are crystalized, details will matter.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.