The International Organization of Securities Commissions (IOSCO) is about as close as we can get to having an overall global securities regulator. It is an international body that brings together the world’s securities regulators and is recognized as the global standard setter for the securities sector. IOSCO develops, implements and promotes adherence to internationally recognized standards for securities regulation. It works intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda. IOSCO was established in 1983 and its membership regulates more than 95% of the world’s securities markets in more than 130 jurisdictions. They are a very important organization in the global regulatory marketplace.
On May 23, 2023, IOSCO issued policy recommendations for crypto and digital asset markets to promote investor protection, market integrity, and financial stability. This is the first global approach to regulating crypto assets and digital markets, drawing on lessons from last year’s collapse of the FTX exchange.
Here is a summary of the key points covered in the IOSCO Policy Recommendations:
- Regulated and Supervised Entities: IOSCO emphasizes the importance of applying existing securities regulations to crypto assets and entities dealing with them. It encourages jurisdictions to regulate and supervise issuers, trading platforms, custodians, and other intermediaries to ensure compliance with relevant standards.
- Investor Protection: IOSCO emphasizes the need to protect investors in the crypto space. It recommends providing clear and accurate information to investors about the risks associated with crypto assets, including potential loss of value, market volatility, and cybersecurity risks.
- Market Integrity: IOSCO stresses the importance of maintaining fair, efficient, and transparent markets. It recommends implementing measures to detect and prevent market manipulation, insider trading, and other fraudulent activities. This includes establishing surveillance mechanisms, enhancing cybersecurity measures, and enforcing robust anti-money laundering and counter-terrorism financing controls.
- Custody and Safekeeping: IOSCO highlights the importance of secure custody and safekeeping of crypto assets. It recommends implementing robust control frameworks to ensure the protection of client assets, including appropriate segregation and safeguarding measures.
- KYC/AML Requirements: IOSCO advises jurisdictions to apply effective Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to crypto asset transactions. It encourages the development of clear standards and cooperation among regulators to combat money laundering, terrorist financing, and other illicit activities.
- Market Transparency: IOSCO recommends enhancing transparency in crypto markets to facilitate informed decision-making. This includes promoting disclosure of relevant information by issuers and trading platforms, as well as providing access to reliable and accurate pricing data.
- Supervisory Cooperation: IOSCO emphasizes the importance of international cooperation among regulators. It encourages regulators to share information, collaborate on cross-border investigations, and develop common approaches to address the challenges posed by crypto assets.
It’s worth noting that these recommendations are intended to provide guidance to regulators and may not have binding force on individual jurisdictions. However, they serve as a valuable framework for regulators worldwide to develop and enhance their regulatory frameworks for crypto and digital asset markets.
The full Consultation Report can be found here: Policy Recommendations for Crypto and Digital Asset Markets Consultation Report
