ICC Securities Watchdog To Help Regulate Cryptocurrency

With a number of securities regulators across the world developing new rules for the crypto industry, the International Organization of Securities Commissions (IOSCO) aims to contribute to the ongoing discussion by releasing its own batch of crypto-focused policy recommendations. 

IOSCO, which is an international body which brings together the globe’s securities regulators, has prepared a report with 18 recommendations, and, following a consultation period, aims to complete its work on the proposed measures in the fourth quarter of this year. 

New recommendations for securities regulators 

“The proposed recommendations are principles-based and outcomes-focused and are aimed at the 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,” the organization said in its report. 

“The proposed recommendations are activities-based and follow a ‘lifecycle’ approach in addressing the key risks identified in this report. They cover the range of activities in crypto-asset markets that involve CASPs from offering, admission to trading, ongoing trading, settlement, market surveillance and custody as well as marketing and distribution (covering advised and non-advised sales) to retail investors,“ according to the international body. 

DeFi recommendations report to be released this summer 

What is noteworthy, IOSCO said that its recommendations do not cover activities, products or services provided in the field of decentralized finance (DeFi). This said, a relevant consultation report with proposed recommendations for DeFi is to be published later this summer, as indicated by the organization. 

In the latest report, IOSCO said its recommendations cover a total of six areas:

• Conflicts of interest resulting from vertical integration of activities and functions;
• Market manipulation, insider trading and fraudulent activities;
• Cross-border risks and regulatory collaboration;
• Custody and client asset protective measures;
• Operational and technological risks;
• Retail access, suitability, and distribution.

“Given the global nature and certain unique characteristics of the crypto-asset market, the application of robust regulatory standards alongside international regulatory cooperation will be pivotal to help ensure that any useful innovation can occur without the risk of regulatory arbitrage and lessening standards of investor protection and market integrity,” the report said. 

Set up in 1983, IOSCO is based in Spain’s capital Madrid. The body’s membership regulates more than 95% of the globe’s securities markets in more than 130 jurisdictions. Securities regulators in emerging markets account for 75% of the organization’s ordinary membership, according to data released by IOSCO.