The International Organization of Securities Commissions (IOSCO) has taken an important step towards addressing issues of market integrity and investor protection in the rapidly evolving crypto market. In a recent consultation a reportIOSCO has outlined its policy recommendations to help create compatible markets for the trading of digital assets.
Coding brackets for regulatory reform
The Digital and Digital Asset Recommendations (CDA Recommendations) are based on IOSCO’s well-established approach to securities regulation, which prioritizes investor protection and market integrity. The recommendations are not binding, but they do provide guidance on best practices for market regulation that can help increase investor confidence and attract more institutional investment in the crypto sector.
The recommendations cover six key areas consistent with IOSCO standards: conflicts of interest arising from vertical integration of activities and functions, market manipulation, insider trading and fraud, cross-border risk and regulatory collaboration, custody and protection of client assets, operational and technological risks and retail access, suitability and distribution.
Acknowledging jurisdictional differences in definition and interpretation, the International Organization of Securities Commissions (IOSCO) has developed a functional and economic approach to mitigating risk rather than attempting to develop a one-size-fits-all descriptive classification.
The recommendations, addressed to all regulators, outline an overarching principle and supporting guidelines and call on all IOSCO members to apply or adapt these guidelines consistently and results-oriented.
According to the report, regulatory frameworks (existing or new) should seek to achieve regulatory outcomes for investor protection and market integrity that are similar or consistent with those required in traditional financial markets to facilitate a level playing field between cryptocurrencies. – Traditional financial assets and markets and help reduce regulatory arbitrage risks.
The UK Treasury Commission classifies cryptocurrency trading as gambling
The International Organization of Securities Commissions (IOSCO) has recommended that cryptocurrencies be treated similarly to traditional financial assets, unlike the latter. suggestion By the UK Parliament’s Treasury Committee which mandates that cryptocurrency trading be regulated as a form of gambling rather than a financial service.
The Treasury Committee’s recommendation follows a new investigation into the cryptocurrency industry, which found that existing regulations are inadequate and that investors are not adequately protected. The commission suggested that cryptocurrency trading be placed under the jurisdiction of the Gambling Commission to provide greater protection to consumers.
However, the IOSCO recommendation takes a different approach, calling for cryptocurrencies to be treated similarly to traditional financial assets to facilitate a level playing field between crypto assets and traditional financial markets and to help reduce regulatory arbitrage risks.
The crypto-asset industry grapples with regulatory uncertainty and a lack of clear guidelines, and IOSCO’s recommendations are a welcome development in the industry. By providing a framework for compliant markets, IOSCO has taken an important step towards increasing transparency and reducing the risks associated with trading crypto assets.
However, it is important to note that IOSCO’s recommendations are not binding, and individual jurisdictions must adopt them to have an effect. The industry is moving toward a more regulated and transparent future, and it remains to be seen how individual jurisdictions will respond to IOSCO’s recommendations.
Featured image from iStock, chart from TradingView.com