Crypto watchdog offers first worldwide standards. On Tuesday, IOSCO published the first global approach to regulate crypto assets and digital markets, drawing from last year’s FTX exchange failure, which raised consumer protection concerns.
Different jurisdictions have different standards, so the industry, which usually has to comply with anti-money laundering inspections, has advocated worldwide regulation.
After a liquidity difficulty, crypto exchange FTX filed for U.S. bankruptcy in November.
Regulators worldwide intervened to prevent conflicts of interest in crypto “conglomerates” like FTX, which mix various businesses under one roof with inadequate safeguards for customer assets.
Jean-Paul Servais, IOSCO’s chairman, said Tuesday’s initiatives mark a turning point in addressing crypto-asset risks like bitcoin and ether.
“Crypto business has been allowed to grow on a flawed basis and it has to be corrected,” Servais told a press conference.
The proposed guidelines address conflicts of interest, market manipulation, cross-border regulatory cooperation, crypto asset custody, operational hazards, and retail customer treatment.
Recent global events demonstrate the need for this work. “This is about making crypto market-safe,” said Financial Conduct Authority director of digital assets Matthew Long.
Kroll’s worldwide lead of blockchain and crypto solutions, Haydn Jones, said IOSCO standards reduce crime and let everyone profit from crypto technology.
The 18 steps avoid conflicts of interest between crypto transaction parties by applying standard market safeguards.
By year’s end, the watchdog expects its 130 members to utilize standards to fill holes in national rulebooks, eliminating fragmented regulation and corporations’ ability to play regulators off one other.
The U.S. Securities and Exchange Commission, Japan’s Financial Services Agency, Britain’s Financial Conduct Authority, and Germany’s BaFin are polling public opinion on the regulations through IOSCO.
The E.U.’s completion of the world’s first comprehensive guidelines this month pressured Britain, the U.S., and other nations to adopt their own.
IOSCO will promote decentralized financial regulation later this summer.
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