IOSCO Pioneers Global Crypto Oversight with New Regulatory Framework

IOSCO, the global securities watchdog overseeing securities market regulators, has recently unveiled its final report, outlining crucial policy recommendations for crypto and digital asset (CDA) markets. This significant development was communicated through a press release provided to Infostride News.

The essence of these recommendations lies in their role in shaping a unified global regulatory response, effectively addressing the substantial investor protection and market integrity risks associated with centralized crypto asset intermediaries, commonly known as crypto asset service providers (CASPs).

The comprehensive and targeted recommendations put forth by IOSCO articulate regulatory expectations. These expectations, contingent upon jurisdiction-specific conditions, advocate for the application of existing rules or the formulation of new ones. This approach aims to mitigate observed harms in these evolving markets.

According to the released statement, the CDA recommendations serve to establish a clear and robust international regulatory baseline. This is intended to ensure that CASPs adhere to the standards of business conduct applicable in traditional financial markets.

Key Areas of Focus
The recommendations span six key areas, aligning with the objectives and principles for securities regulation outlined by IOSCO. These areas, supported by relevant IOSCO standards, recommendations, and good practices, include conflicts of interest arising from vertical integration, market manipulation, insider trading and fraud, custody and client asset protection, cross-border risks and regulatory cooperation, operational and technological risk, and retail distribution.

Stakeholder Perspectives
Jean-Paul Servais, Chair of IOSCO, expressed satisfaction with the publication of the report on Crypto and Digital Asset Markets. He emphasized its pivotal role as the initial and crucial step toward safeguarding investors and ensuring fair, efficient, and transparent operation of crypto asset markets. Additionally, Servais highlighted the report’s significance within the international framework envisioned by the G20 and FSB. Looking ahead, he emphasized the need for widespread adoption and implementation of the recommendations to ensure consistency in the regulation of crypto-asset markets across IOSCO member jurisdictions.

Tuang Lee Lim, Chair of the IOSCO Board-Level Fintech Task Force, instrumental in developing the policy measures, provided insights into the rationale behind the recommendations. Lim noted that the activities of CASPs and the associated risks often mirror those observed in traditional financial markets. The regulatory approach outlined in the 18 recommendations for crypto and digital asset markets aligns with IOSCO’s principles and standards for securities market regulation. The recommendations are outcomes-focused and adhere to the principle of “same activity, same risk, same regulatory outcome.”

This IOSCO initiative reflects a crucial step in acknowledging and addressing the evolving landscape of crypto and digital asset markets. By providing a comprehensive framework and standards, IOSCO aims to foster global cooperation and consistency in the regulation of these markets, ultimately promoting investor confidence and market integrity. As the recommendations move towards adoption and implementation, the global financial community will be closely monitoring the impact on regulatory practices and the overall stability of the crypto asset ecosystem.