On May 23, the global securities watchdog International Organization of Securities Commissions (IOSCO) released a consultation paper with recommendations to jurisdictions across the globe as to how to regulate crypto assets. These recommendations focus on six key areas: Conflicts of interest arising from vertical integration (juggling multiple roles that can influence each other) of activities and functions. Market manipulation, insider trading and fraud Cross-border risks and regulatory cooperation Custody and client asset protection Operational and technological risk Retail access, suitability, and distribution About IOSCO: IOSCO is an association of global organizations that regulate the securities and futures markets. Some of its members are the regulatory bodies of India, Japan, Australia and Germany. Why it matters: Regulation of crypto has become particularly important given the various crypto-related scams we have seen in the past couple of years. Previously, we have seen crypto regulation efforts from the European Union, where the Markets in Crypto Assets (MiCA) regulation was recently passed. Just like the EU’s crypto regulatory act, these recommendations can act as a guideline for regulatory bodies in member countries to incorporate cryptocurrency into their existing frameworks or create new crypto-specific frameworks. What do the recommendations entail? Analyzing crypto regulatory frameworks: Regulators should use existing frameworks or create new frameworks to oversee crypto-asset trading, other crypto-asset services, and the issuing, marketing, and selling of crypto-assets (including as investments). Regulators are to analyze the applicability of the existing or new frameworks to crypto assets that are substitutes for or behave like regulated financial instruments.…
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