Global securities regulators are working towards creating a consistent and comprehensive regulatory framework for digital assets across borders. The International Organization of Securities Commissions (IOSCO) has recently released 18 policy recommendations aimed at bringing uniformity and robust oversight to the digital asset space.
The finalized guidelines are principles-based and outcomes-focused, designed to align the regulatory frameworks of IOSCO member jurisdictions. These recommendations address pressing concerns regarding market integrity and investor protection in digital asset activities.
At the core of IOSCO’s recommendations is the pursuit of greater consistency in regulating digital asset activities across borders. This approach echoes the principles of “same activities, same risks, same regulation/regulatory outcomes” and seeks to minimize regulatory arbitrage and protect retail investors exposed to significant risks in the crypto markets.
The comprehensive recommendations span critical areas, including conflicts of interest, market manipulation, cross-border risks, custody and asset protection, operational risks, and retail distribution. Each area addresses specific aspects of digital asset operations, from governance and disclosure of conflicts in vertically integrated CASP business models to tackling abusive market behaviors and enhancing cross-border cooperation for effective supervision.
IOSCO’s guidelines respond to the “fragmented” nature and the “lack of transparency” of the crypto market, which has led to significant investor losses and market manipulations. By setting clear expectations to control and monitor manipulative practices and prevent misuse of inside information, these recommendations aim to fortify market integrity and shield investors from undue harm.
Recognizing the varied regulatory environments across jurisdictions, IOSCO’s recommendations are designed for flexibility in implementation. They encourage regulators to evaluate the applicability of their frameworks to digital assets and consider specific requirements to address the identified risks and investor harm.
The inclusion of stablecoins in the recommendations further highlights the growing importance of stablecoins in the crypto market and the need for regulations that address their specific risks and uses.
In conclusion, IOSCO’s 18 policy recommendations represent a significant step towards creating a consistent and comprehensive regulatory framework for digital assets. By addressing critical areas such as market integrity, investor protection, and cross-border risks, these guidelines aim to bring uniformity and robust oversight to the digital asset space, ultimately safeguarding investors and promoting fair and efficient markets globally.