The new head of IOSCO (International Organization of Authorities) said in an interview that the collapse of the FTX exchange has made regulation of the cryptocurrency sector more urgent, and targeting these “conglomerate” platforms will be a priority for 2023.
Regulation of cryptocurrency platforms can take inspiration from the principles of other sectors that manage conflicts of interest, such as credit rating agencies and market standards aggregators, Jean-Paul Servier said, without having to start from scratch.
Cryptocurrencies like bitcoin have been around for years, but regulators didn’t want to write new rules.
Service said FTX’s internal implosion, which left an estimated one million creditors facing billions of dollars in losses, would help change that.
“The sense of urgency wasn’t the same as two or three years ago. There are different opinions on whether encryption is a real problem internationally because some people think it is not a big deal or risk.Service said.
“Things are changing and because of the interdependence of different types of businesses, I think it’s important now that we can start a discussion and that’s where we go. “
IOSCO, which coordinates rules for G20 countries and others, has already laid out principles for regulating stablecoins, but the focus now is on the platforms that trade them.
In traditional finance, there is a functional separation between activities such as brokerage, trading, banking and issuance, each with its own set of rules of conduct and safeguards.
“Is this the case for the cryptocurrency market? I would say most of the time, noService said.
Cryptocurrency “conglomerates” such as FTX have emerged, Servis said, which perform multiple roles such as brokerage, custody, proprietary trading, and token issuance all under one roof, creating conflicts of interest.
“For investor protection reasons, it is necessary to provide additional clarity to the cryptocurrency markets through targeted guidance in applying the IOSCO Principles to crypto assets.Service said.
“We intend to publish an advisory report on these issues in the first half of 2023“, he added.
IOSCO, or the International Organization of Securities Commissions, headquartered in Madrid, is the umbrella organization for market watchdogs such as the Securities and Exchange Commission in the United States, Bafin in Germany, Financial Services in Japan, and the Financial Conduct Authority in the United States. The Kingdom, which undertakes to implement the recommendations of the organization.
The EU’s new Framework on Crypto Asset Markets, or MiCA, is an “interesting starting point” for the development of global guidelines, as it focuses on the supervision of cryptocurrency operators, said Ms Servais, who also heads Belgian financial regulator FSMA.
“I think the world is changing. We know there is some room to develop new standards for overseeing these types of cryptocurrency blockchains. It is an obvious necessityMr. Service said.
Source: Jean-Paul Servais, President, International Organization of Securities Commissions (IOSCO)
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