IOSCO Urges Global Regulators to Accelerate and Strengthen Oversight of Crypto Markets

The International Organization of Securities Commissions (IOSCO), the global securities watchdog, has called for regulators to take faster and bolder actions to tame cryptocurrency markets and to address conflicts of interest within companies. 

This recommendation comes as IOSCO unveiled a comprehensive blueprint aimed at regulating the volatile and rapidly evolving landscape of the financial industry, often referred to as the “wild west” of finance.

IOSCO’s response comes after the recent crypto turmoil

In response to a series of industry incidents, particularly the recent turmoil surrounding the crypto exchange FTX, IOSCO published a set of guidelines on Tuesday. The 18-point plan outlines measures for authorities to strengthen their standards and address potential risks associated with conflicts of interest, disclosure rules, and governance within the cryptocurrency sector. 

These guidelines serve as a proactive effort to mitigate the challenges arising from the growing complexity and risks inherent in the industry.

Iosco secretary-general Martin Moloney told the Financial Times that “the diversity we’ve got at the moment across jurisdictions is not that they’re moving in different directions, but that they haven’t gone far enough in the direction that they all know they should go in.”

Moloney stated that the regulators should push ahead, as it is not helpful for anyone to hold back at this point.

Moloney and Jean-Paul Servais, Chair of IOSCO and Belgium’s securities regulator, have highlighted the presence of various services offered by crypto companies, including broking, trading, custody, and market-making. They have observed that, unlike traditional finance firms, these activities are often not segregated.

The proposals put forth by IOSCO suggest that regulators should assess whether certain conflicts of interest are severe enough that they cannot be adequately mitigated. 

In such cases, they may consider implementing stronger measures, such as legally separating activities and requiring separate registration and regulation for specific activities. These measures aim to address potential conflicts of interest and enhance regulatory oversight in the crypto industry.