New Policy Recommendations Aim To Provide Clarity On Crypto Regulatory Challenges

A leading global standard-setter for securities market regulators, has released its highly anticipated Final Report with Policy Recommendations for Crypto and Digital Asset (CDA) Markets.

This development marks a significant step in providing a coordinated global regulatory response to the evolving landscape of crypto-assets.

The 18 policy recommendations issued by International Organization of Securities Commissions (IOSCO) aim to address significant investor protection and market integrity risks posed by crypto-asset activities, particularly those involving centralized crypto-asset intermediaries, known as crypto-asset service providers (CASPs).

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These recommendations are aligned with IOSCO's widely accepted global standards for securities markets regulation and follow a lifecycle approach, encompassing activities from offering admission to trading to ongoing trading, settlement, market surveillance, custody, and retail distribution​​.

A key focus of these recommendations is to enhance cooperation among regulators, providing a crucial benchmark for IOSCO members to coordinate and respond to challenges across borders, particularly those arising from global crypto-asset activities conducted by CASPs.

This is especially pertinent as CASPs often provide their services remotely into multiple jurisdictions, which raises concerns about regulatory arbitrage​​.

The recommendations are structured around six core areas, consistent with IOSCO Standards:

1. Addressing conflicts of interest arising from vertical integration of activities and functions.
2. Tackling market manipulation, insider trading, and fraud.
3. Managing cross-border risks and enhancing regulatory cooperation.
4. Ensuring custody and protection of client assets.
5. Addressing operational and technological risks.
6. Regulating retail access, suitability, and distribution​​.

IOSCO's approach is to assist its members in applying its Objectives and Principles for Securities Regulation and relevant supporting standards, recommendations, and good practices to crypto-asset activities within their jurisdictions.

This move is in response to widespread concerns about market integrity and investor protection in the crypto-asset markets​​.

The release of these recommendations is a critical step towards creating a more secure and regulated environment for the trading and handling of crypto and digital assets, offering a level of investor protection and market integrity similar to that in traditional financial markets.

This initiative by IOSCO is expected to pave the way for a more robust and harmonized global regulatory framework for crypto-assets, addressing the dynamic and often complex nature of these emerging markets.

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