Watchdog proposes first set of global rules for the crypto sector
Push for a global approach in the crypto sector comes after the collapse of the FTX exchange.
By Anna B Kiwanuka
The International Organization of Securities Commissions (IOSCO) has unveiled today the first global approach to regulating crypto assets and digital markets, drawing on lessons from last year’s collapse of the FTX exchange that fuelled concerns over consumer protection.
The cryptocurrency industry, known for its adherence to anti-money laundering (AML) checks, has been advocating for a unified regulatory framework on a global scale. Currently, various jurisdictions operate under their own rules, leading to a fragmented regulatory landscape. The urgency for harmonized regulation has been further underscored by recent events, such as the liquidity crisis faced by FTX, a prominent crypto exchange, which resulted in the initiation of bankruptcy proceedings in the United States last November. The severity of the situation prompted regulators worldwide to intervene.
According to Jean-Paul Servais, who chairs watchdog IOSCO, the recommendations are a turning point in addressing the very clear and proximate risks to investor protection and market integrity risk.
Conflicts of interest, market manipulation, international regulatory cooperation, custody of crypto assets operational concerns, and treatment of retail clients are all addressed in the proposed standards.
The 18 measures planned apply long-established safeguards from mainstream markets to eliminate conflicts of interest between the different parts of a crypto transaction.
The watchdog stated that it planned to complete the standards by the end of the year and anticipated that its 130 members around the world would use them to quickly close gaps in national rulebooks.
IOSCO, a collective of regulators that includes the US Securities and Exchange Commission, the Financial Services Agency of Japan, the Financial Conduct Authority of the United Kingdom, and the BaFin of Germany, is polling the public on the regulations.
The action comes as the European Union this month finalized the first set of comprehensive standards in the world, increasing pressure on Britain, the United States, and other nations to develop their own guidelines.
The first set of global rules for the crypto sector by the watchdog carries significant implications for Africa’s crypto industry, considering the continent’s notable surge in cryptocurrency adoption and blockchain technology innovation in recent years.
Not only do the rules present an opportunity for Africa’s crypto industry to mature, gain credibility, and attract increased investment, they also present a way for African Governments and regulatory bodies to create better and more stable crypto industries.