The International Organization of Securities Commissions (IOSCO), a prominent global securities watchdog, is taking steps to enhance the effectiveness of cryptocurrency regulation by providing regulatory recommendations to policymakers.
In a consultation report developed by the IOSCO Board’s Fintech Task Force and released on May 23, the organization outlined 18 policy recommendations aimed at addressing market integrity and investor protection concerns related to crypto. These recommendations will undergo a consultation period until the end of July, with the plan to finalize them by late 2023.
IOSCO’s overarching recommendation emphasizes the need for regulators worldwide to ensure regulatory consistency between cryptocurrency and traditional financial markets. The organization advises policymakers to strive for regulatory outcomes that align with those required in traditional finance, promoting a level playing field and reducing the risk of regulatory arbitrage.
IOSCO also urges regulators to assess the applicability and sufficiency of their existing crypto regulatory frameworks, considering the extent to which they function as substitutes for regulated financial instruments. This approach should be applied to all types of crypto assets, including stablecoins such as Tether (USDT).
Established in 1983, IOSCO consists of organizations that regulate securities and futures markets globally. With 35 securities regulators worldwide, including the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission, IOSCO members collectively oversee over 95% of the world’s securities markets.
While IOSCO encourages a balanced regulatory approach, some of its members have faced criticism for lacking clarity in crypto regulation. U.S. Congressman Tom Emmer, known for his crypto-friendly stance, has expressed concerns about the apparent inconsistencies in the SEC’s approach to crypto regulation, suggesting that they have hindered the authority’s ability to address significant industry collapses.
IOSCO’s efforts to promote regulatory consistency in the crypto industry aim to foster a more transparent and stable environment for investors and align the regulatory landscape with traditional financial markets.