In response to the concerns over consumer protection and lessons learned from the collapse of the FTX exchange last year, international securities watchdog, the International Organisation of Securities Commissions (IOSCO), revealed on Tuesday its plans to establish the first global approach to regulating crypto assets and digital markets.
Crypto assets and digital markets have been operating under varying regulations across jurisdictions, with compliance typically limited to anti-money laundering checks. The lack of a unified global framework has been a longstanding concern for the industry, leading to the call for coordinated international regulation.
The proposed regulations are “principles-based and outcomes-focused and are aimed at activities performed by crypto-asset service providers (CASPs). They apply IOSCO’s widely accepted global standards for securities markets regulation to address key issues and risks identified in crypto-asset markets.”
Jean-Paul Servais, chairman of IOSCO told Reuters that these recommendations are a “turning point in addressing the very clear and proximate risks to investor protection and market integrity risks.”
The proposed regulations encompass a range of areas, including conflict of interest management, market manipulation prevention, cross-border regulatory cooperation, custody of crypto assets, operational risk management, and the treatment of retail customers. By applying established safeguards from traditional financial markets, the aim is to ensure transparency and eliminate conflicts of interest within the crypto transaction process.
IOSCO aims to finalise the standards by the end of the year and expects its 130 member organisations worldwide, which also include regulators like the U.S. Securities and Exchange Commission, Japan’s Financial Services Agency, the UK’s Financial Conduct Authority, and Germany’s BaFin, to promptly incorporate them into their rulebooks.
This move aligns with the European Union’s recent finalisation of the world’s first comprehensive set of rules for crypto assets, increasing pressure on other countries, including the United States and the United Kingdom, to develop their own regulatory frameworks.
With the potential establishment of global standards, the crypto industry could benefit from increased clarity, investor protection, and a more consistent regulatory landscape, fostering trust and wider adoption of digital assets and markets.
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