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Insights Trends International Watchdog Proposes First Set of Crypto Rules

International Watchdog Proposes First Set of Crypto Rules

May 24, 2023 Trends
BITmarkets | International Watchdog Proposes First Set of Crypto Rules

The International Organization of Securities Commissions (IOSCO) introduced the first global approach to regulating crypto assets and digital markets, drawing lessons from the collapse of the FTX exchange in 2022, which raised concerns about consumer protection.

The crypto industry, which has traditionally only had to comply with anti-money laundering measures, has been advocating for a unified regulatory framework as different jurisdictions have their own rules. The bankruptcy proceedings of FTX last year highlighted the need for regulations governing crypto conglomerates like FTX that engage in various activities with limited safeguards for customer assets, prompting regulatory intervention worldwide.

The plans unveiled mark a significant step in addressing the risks associated with crypto assets such as bitcoin and ether, according to Jean-Paul Servais, the chair of IOSCO, who emphasized the need to correct the flawed foundation on which the crypto business has been allowed to grow.

The proposed standards encompass several areas, including addressing conflicts of interest, preventing market manipulation, promoting cross-border regulatory cooperation, establishing secure custody of crypto assets, managing operational risks, and ensuring the protection of retail customers.

Matthew Long from the UK's Financial Conduct Authority emphasized the need for these standards to ensure the safety of the crypto market considering recent global events. The 18 measures aim to apply established safeguards from traditional markets to eliminate conflicts of interest in crypto transactions. 

IOSCO plans to finalize the standards by the end of the year and expects its members, including regulatory bodies from around the world, to incorporate them into their rulebooks, eliminating fragmented regulation and preventing firms from exploiting regulatory gaps. IOSCO is seeking public input on the regulations and will also issue recommendations for regulating decentralized finance later this summer.

The EU's recent adoption of comprehensive rules in this field adds pressure on other countries, including the UK and the US, to develop their own regulatory frameworks.






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