The International Organization of Securities Commissions (IOSCO), a global regulatory body overseeing securities markets, has issued a comprehensive report outlining policy recommendations for the regulation of crypto and digital asset (CDA) markets. The report aims to establish a unified global regulatory framework to address significant risks to investor protection and market integrity posed by centralized crypto asset service providers (CASPs).
The recommendations outlined in the report play a pivotal role in shaping a cohesive global approach to regulation, emphasizing the need to mitigate potential harms in the crypto market. The report suggests that existing rules or new regulations, depending on jurisdiction, can be employed to meet regulatory expectations and address critical areas of concern.
The focus of IOSCO’s recommendations is to create a robust global regulatory foundation, ensuring that CASPs adhere to business conduct standards akin to those applicable in traditional financial markets. Key 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 risks, and retail distribution.
The report aligns with IOSCO’s overarching goals and principles for securities regulation, incorporating relevant supporting standards, recommendations, and best practices. The organization’s board, composed of 35 regulators and top executives from entities like the U.S. Commodity Futures Trading Commission, the U.S. Securities and Exchange Commission, and the UK’s Financial Conduct Authority, among others, collaborated on these recommendations.
Notably, this report follows IOSCO’s previous publications in 2022 on topics such as decentralized finance (DeFi), stablecoins, and influencers. The organization recommends that national regulators acquire supervisory capacities, including channels to report consumer complaints related to misleading and illegal promotions, as well as evidence-tracking processes to address the dynamic nature of online information. IOSCO’s efforts underscore the growing recognition of the need for comprehensive regulatory frameworks to safeguard the rapidly evolving landscape of crypto and digital assets.