The International Organization of Securities Commissions (IOSCO) has released its policy recommendations for the regulation of crypto and digital assets markets for public comment. The recommendations are made up of 18 different policies that cover a range of issues, such as market abuse, conflicts of interest, client asset protection, disclosures, and crypto-related risks. IOSCO is a forum that groups securities regulators from around 130 countries and established a Fintech Task Force (FTF) last year to develop its regulatory agenda for fintech and crypto. The FTF is made up of 27 of 33 board member jurisdictions and includes two working groups. One is run by the UK’s Financial Conduct Authority and was set to publish recommendations for crypto assets this year, while the other is run by the US Securities and Exchange Commission and is working on decentralized finance (DeFi).
Tougher regulations on crypto have been called for by global standard-setters after the collapse of stablecoin issuer Terra and crypto exchange FTX last year. The Financial Action Task Force (FATF), an international financial crimes watchdog, also recently called on the Group of Seven (G-7) advanced economies to lead in implementing its recommended norms for preventing money laundering. The IOSCO Board has given its unanimous approval for the recommendations, and Jean-Paul Servais, the Chairperson of IOSCO, stated that “the time has come to put an end to the regulatory uncertainty that characterizes crypto activities.”
The Financial Stability Board (FSB) is due to publish its recommendations for stablecoins later this year, and the coming global crypto rules will be based on a joint FSB and International Monetary Fund synthesis paper. The consultation period on the recommendations will close on July 31, giving stakeholders the opportunity to voice their opinions on the recommendations before they are finalized. The IOSCO recommendations on crypto would provide a much-needed regulatory framework for digital assets and create a level playing field for businesses operating in the space. It would also help to protect consumers and prevent financial crime.