Key Takeaways
- IOSCO is looking to encourage consistency in the way crypto-asset markets are regulated
- IOSCO to soon shift its focus to regulatory capacity building and technical assistance to members
In a bid to foster consistent regulatory oversight within the crypto sector, the International Organization of Securities Commissions (IOSCO) revealed a set of nine policy recommendations on December 19.
As the global standard-setter for securities markets regulation, IOSCO delves into critical issues such as market abuse, conflict of interest, client asset protection, disclosures, and risks associated with crypto in these comprehensive guidelines.
The significance of these recommendations lies in the detailed treatment provided for each. For instance, Rule 7 emphasizes the importance of “enforcing applicable laws” and offers valuable insights into potential tools for regulators when dealing with decentralized finance (DeFi) or other market participants attempting to evade regulation.
IOSCO is actively pursuing consistency in the regulation of both crypto-asset markets and securities markets, guided by the principle of ‘same activity, same risk, same regulation/regulatory outcome.’
The release of DeFi recommendations complements a prior set of crypto and digital asset recommendations unveiled in November. The organization has also issued guidance on how these two sets of recommendations should be applied concurrently, accounting for the level of decentralization of the regulated entity.
Recommendation 2, titled “identify responsible persons,” challenges the notion that decentralization exempts entities from regulation. It asserts that irrespective of governance structures or decentralization levels, there usually exists a Responsible Person(s) that controls or significantly influences product offerings, service provisions, or engagement in activities.
With the recommendations now complete, IOSCO is set to shift its focus towards monitoring, regulatory capacity building, and providing technical assistance to its members.
This proactive move by IOSCO follows its November 16 release of a report titled “Policy Recommendations for Crypto and Digital Asset Markets,” urging centralized financial bodies to develop parallel, global policies on crypto assets, including considerations for a country’s stablecoin.
