The consultation period for the initial set of global standard-setter’s comprehensive recommendations regarding the regulation of cryptocurrency will come to an end on July 31. On Tuesday, the International Organization of Securities Commissions (IOSCO) fanned out its policy recommendations for crypto and digital asset markets for public comments.
According to a press release, there are a total of 18 policy recommendations that circumscribe various aspects including market abuse, conflict of interest, client asset protection, disclosure, and risks linked to crypto. The recommendations put forward, primarily aim to tackle the “wide-ranging concerns associated with safeguarding investors and maintaining integrity in the market”, within the crypto realm.
In the previous year, the global policy forum, which consists of securities regulators from approximately 130 countries, formed a Fintech Task Force (FTF) to shape IOSCO’s regulatory plans for fintech and crypto. Chaired by the Monetary Authority of Singapore, the FTF comprises 27 out of the 33 board member jurisdictions.
There are two working groups within the FTF task force, with one supervised by the U.K.’s Financial Conduct Authority, expected to release crypto asset recommendations this year. The other working group is led by the U.S. Securities and Exchange Commission, emphasizing decentralized finance (DeFi).
The recent failures of stablecoin issuer Terra and crypto exchange FTX have reignited the push for more stringent crypto regulations by global standard-setters. The Financial Stability Board (FSB) may release recommendations for stablecoins in the prospective future. The impending global crypto regulations will be influenced by a collaborative synthesis paper from the FSB and the International Monetary Fund (IMF).
The Financial Action Task Force (FATF), an international organization focused on combating financial crimes, urged the economies of the Group of Seven (G-7) to take the beginning steps in implementing its recommended measures for preventing money laundering. Jean-Paul Servais, the chairperson of IOSCO highlighted the need to address the regulatory uncertainty encompassing crypto activities.
This paper comes as a result of extensive efforts involving regulatory risk analysis, information sharing, and capacity building. Servais stated that among the recommendations, those related to conflict of interest and the protection of client assets are the least unexpected but potentially the most critical.
When asked about the potential legitimization of crypto through the release of policy recommendations, Servais clarified that IOSCO focuses on financial regulation and does not extend its authority to the realm of gambling, as proposed by a group of U.K. lawmakers. The consultation period for these recommendations will conclude on July 31st.