TL;DR Breakdown
- IOSCO has released a recommended guide to help regulators strengthen the regulatory framework of the crypto industry.
- The body wants regulatory clarity and criticism of the regulatory framework.
The International Organization of Securities Commissions (IOSCO), a prominent global securities watchdog, has taken steps to assist policymakers in effectively regulating cryptocurrency. On May 23, the IOSCO Board’s Fintech Task Force released a consultation report containing a set of regulatory recommendations concerning cryptocurrencies.
IOSCO releases its recommendations
The report consists of 18 policy recommendations aimed at helping securities regulators worldwide address concerns related to market integrity and investor protection in the crypto space. Following a consultation period until the end of July, the recommendations are expected to be finalized by late 2023.
In its first chapter, IOSCO presents an overarching recommendation advising regulators not to create disparities between the regulation of cryptocurrency and traditional finance. The organization suggests that crypto regulators should strive to achieve regulatory outcomes that are consistent with those required in traditional financial markets.
This approach aims to establish a level-playing field between crypto-assets and traditional financial markets while reducing the risk of regulatory arbitrage. IOSCO emphasizes the importance of promoting consistency among its members in regulating and overseeing crypto-asset activities, due to the cross-border nature of crypto markets and the potential harm posed to retail investors. It encourages regulators to assess the applicability and adequacy of their existing crypto regulatory frameworks, considering whether they effectively cover various types of crypto assets, including stablecoins like Tether.
The body wants enhanced transparency in the crypto industry
Established in 1983, IOSCO is an association of organizations that regulate securities and futures markets worldwide. Its Board, comprising 35 securities regulators from around the globe, including the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission, serves as the governing and standard-setting body for its members.
IOSCO members collectively regulate over 95% of the world’s securities markets. While IOSCO promotes a regulatory balance between traditional finance and the crypto industry, some of its members have faced criticism for lacking clarity in crypto regulation.
Congressman Tom Emmer, known for his support of cryptocurrencies, has criticized SEC Chair Gary Gensler for what he perceives as an inadequate approach to crypto regulation. Emmer has pointed out perceived inconsistencies in the SEC’s regulation, suggesting that they have resulted in the authority missing notable collapses within the crypto industry.
Overall, IOSCO’s recommendations seek to enhance regulatory consistency and investor protection in the global crypto landscape. By encouraging regulators to align crypto regulation with established financial market principles, IOSCO aims to create a more robust and balanced regulatory framework for the evolving crypto industry.
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