The International Organization of Securities Commissions (IOSCO) released a consultation report on May 23, 2023, proposing several policy recommendations in furtherance of its goal to promote consistency in the regulation of crypto-asset activities.
The policy recommendations are in line with the IOSCO Crypto-Asset Roadmap published by the organization back in June 2022 and are expected to be finalized later this year. The proposed recommendations aim to address cross-border challenges arising from global crypto-asset activities carried out by Crypto-Asset Service Providers (CASPs) that often provide remote services in multiple jurisdictions.
Some of the recommendations are as follows: –
- Regulatory frameworks should seek to achieve regulatory outcomes for investor protection and market integrity that are similar to those required in traditional financial markets.
- CASPs have to ensure that adequate governance and organizational requirements are in place to address the risks associated with vertical integration i.e., service providers performing multiple functions such as exchange trading, brokerage, settlement, etc.
- The role and capacity in which the CASP is acting at all times have to be disclosed.
- To prevent front-running, CASPs would be required to implement systems and policies that provide for fair, orderly, timely execution in the best interest of clients.
- Certain important disclosures about the crypto-assets have to be made to help investors make informed decisions.
- Manipulative market practices need to be identified and monitored through effective systems and controls.
The stakeholders have been requested to share their responses by July 31, 2023.