IOSCO Sets the Standard for Global Crypto Regulation

IOSCO has published a consultation report entitled Policy Recommendations for Crypto and Digital Asset Markets with detailed recommendations for jurisdictions on how to regulate crypto-assets.
The report aims to improve global standards of regulation of crypto-assets and to address market integrity and investor protection issues. The proposed recommendations are principles-based and outcomes-focused, and they cover the range of activities in crypto-asset markets that involve CASPs.
The 18 policy recommendations have been developed under the stewardship of the IOSCO Boards FTF in accordance with IOSCO’s Crypto-Asset Roadmap published in June 2022. The proposed recommendations are not directly addressed to market participants, but they encourage CASPs and all participants in crypto-asset markets to carefully consider the expectations and outcomes articulated through the proposed recommendations and the respective supporting guidance in the conduct of registered/licensed, and cross-border activities.
One of IOSCO’s goals is to promote greater consistency with respect to how IOSCO members approach the regulation and oversight of crypto-asset activities, given the cross-border nature of the markets, the risks of regulatory arbitrage, and the significant risk of harm to which retail investors continue to be exposed.
IOSCO is also seeking to encourage optimal consistency in the way crypto-asset markets and securities markets are regulated within individual IOSCO jurisdictions, in accordance with the principle of same activities, same risks, same regulatory outcomes.
The proposed recommendations also cover the need for enhanced cooperation among regulators. They aim to provide a critical benchmark for IOSCO members to cooperate, coordinate and respond to cross-border challenges in enforcement and supervision, including regulatory arbitrage concerns that arise from global crypto-asset activities conducted by CASPs that offer their services, often remotely, into multiple jurisdictions.
The proposed recommendations are activities-based and follow a lifecycle approach in addressing the key risks identified in this report. They cover the range of activities in crypto-asset markets that involve CASPs from offering, admission to trading, ongoing trading, settlement, market surveillance and custody as well as marketing and distribution (covering advised and non-advised sales) to retail investors. The proposed recommendations do not cover activities, products or services provided in the so-called DeFi area.
IOSCO has opened a public consultation on its recommendations and aims to finalize them by the end of the year. Thereafter, it expects that jurisdictions will review their current regulatory frameworks to ensure that they comply with the standards and fix any gaps promptly. IOSCO welcomes input from all stakeholders as part of this consultation process. Consultation responses should be submitted to cryptoassetsconsultation@iosco.org by 31 July 2023. The comment letter should indicate prominently that it is a Public Comment on IOSCO’s Policy Recommendations for Crypto and Digital Asset Markets Consultation Report.