IOSCO Introduces First Global Standards for Regulating Crypto Markets, Boosting Investor Confidence and Addressing Concerns of Consumer Protection

On Tuesday, the International Organization of Securities Commissions (IOSCO) revealed the first global approach to regulating cryptoasset and digital markets, utilizing lessons learned from the 2020 collapse of the FTX exchange that raised concerns regarding consumer protection. The crypto industry, which usually only has to comply with anti-money laundering checks, has been requesting a global approach to regulation as different jurisdictions have their own rules. This comes after crypto exchange FTX began U.S. bankruptcy proceedings in November 2020 due to a liquidity crisis that prompted intervention from regulators worldwide. The proposed standards cover dealing with conflicts of interest, cross-border regulatory cooperation, operational risks, market manipulation, custody of cryptoassets, and treatment of retail customers. The watchdog aims to finalize the standards by year-end, with its 130 members worldwide expected to use them promptly to address gaps in their rulebooks. The measures apply long-established safeguards from mainstream markets to eliminate conflicts of interest between the various parts of a crypto transaction.

The IOSCO is canvassing public opinion on the regulations and expects the member countries to follow suit. The European Union recently finalized the world’s first comprehensive set of rules, putting pressure on other countries, including the United States and Britain, to develop their own standards.