After the collapse of FTX, the desire of global regulators to write new rules on the crypto market has been growing.
The president of world securities regulator IOSCO, Jean-Paul Servais, considers it necessary to start the discussion on the subject.
In his opinion, there are already financial principles and laws that could serve as a reference framework for the regulation of cryptography at a global level.
The collapse of the FTX.com crypto exchange renewed concern about the cryptocurrency market and the need to regulate it as soon as possible. In this sense, 2023 will be a decisive year to establish new rules of the game that lead to greater supervision and control of these markets, hitherto semi-regulated.
According to the chairman of the global securities regulator IOSCO, Jean-Paul Servais, the regulation of digital assets does not have to start from scratch. In an interview with Reuters, Servais suggested taking certain principles from other sectors related to conflicts of interest.
The official proposes to study the rules that govern credit rating agencies and market benchmark compilers. Despite the rapid expansion of the cryptocurrency market and the problems that have arisen with its trading, the crypto space has so far remained unregulated.
However, the magnitude of the crisis unleashed this year by the collapse of the price of cryptocurrencies and the bankruptcy of several of the main digital money trading and lending companies has accentuated the need to intervene in the market and write new rules.
The Sense of Urgency has Changed
The massive loss of funds from close to a million clients of FTX, Sam Batman-Fried’s platform that imploded due to administrative mishandling, is helping to change the perspective of regulators on the crypto industry, Servais said.
“The sense of urgency was not the same even two or three years ago,” he said. “There are some dissenting opinions about whether crypto is a real issue at the international level because some people think that it’s still not a material issue and risk.” Servais specified.
However, he pointed out that this is changing due to “the interconnectivity between different types of businesses” so he considers that this is the time “to start a discussion and that’s where we are going.”
Crypto Markets Need a Guide
The International Organization of Securities Commissions (IOSCO) brings together regulators from the world’s most industrialized countries, including the members of the G20. The body has already established principles for the regulation of stablecoins and will now focus on trading platforms.
Servais explained that unlike the traditional financial system, where the activities of each sector are separated and governed by their own set of rules of conduct and consumer protection, this is not the case for the most part in the cryptocurrency market.
The official referred to the rise of crypto ‘conglomerates’ like FTX where these functions are not separate. He indicated that trading, brokerage, asset custody, and token issuance services are provided equally on these platforms, which generates conflicts of interest.
He added that in order to protect investors, specific guidance should be published allowing IOSCO principles to be applied to digital money trading as well. In this way, the cryptocurrency markets will be able to count on greater clarity for their operations.
On the Flipside
By the first half of next year, the Madrid-based global regulator plans to publish a consultation report on the subject.
Why You Should Care
The discussion on a global guide for the regulation of the crypto market could start from the regulatory framework for MICA digital assets proposed by the European Union, Servais said. This law focuses on the supervision of cryptocurrency trading operators.
If you would like to learn more about cryptocurrency regulatory issues, please read these two articles:
Bank of England: FTX Collapse Shows Need to Regulate Crypto
Brazil Reactivates Cryptocurrency Regulatory Discussion Thanks to FTX Disaster
This article has been originally published at: https://dailycoin.com/2023-key-year-for-global-crypto-regulation/