Global: IOSCO Unveils Comprehensive Crypto Regulatory Framework Proposals

The International Organization of Securities Commissions (IOSCO), a global regulatory body overseeing securities markets, has released a definitive report outlining policy recommendations for crypto and digital asset (CDA) markets.

The suggestions in the report are pivotal in establishing a unified global regulatory approach to address significant risks to investor protection and market integrity posed by centralized crypto asset intermediaries known as crypto asset service providers (CASPs).

IOSCO’s focused recommendations provide a detailed explanation of regulatory expectations, suggesting the application of existing rules or the creation of new ones depending on the jurisdiction. The goal is to address identified critical areas of harm in these markets.

According to the report, the CDA recommendations aim to establish a distinct and robust global regulatory foundation, ensuring that CASPs adhere to business conduct standards applicable in traditional financial markets.

The recommendations cover essential domains, aligning with IOSCO’s goals and principles for securities regulation, along with relevant supporting standards, recommendations, and best practices. Critical areas addressed include conflicts of interest from vertical integration, market manipulation, insider trading, fraud, custody, client asset protection, cross-border risks, regulatory cooperation, operational and technological risk, and retail distribution.

IOSCO’s board, consisting of 35 regulators and top executives, including heads of the United States Commodity Futures Trading Commission, the U.S. Securities and Exchange Commission, and the United Kingdom’s Financial Conduct Authority, among others, collaboratively developed these proposals.

In 2022, IOSCO previously published reports on DeFi, stablecoins, and influencers. The recommended supervisory capacities for national regulators include channels for reporting consumer complaints related to misleading and illegal promotions, as well as evidence-tracking processes to cope with the fast-paced and changing nature of online information.