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International Securities Watchdog Lays Out Crypto Regulation Strategy

2 mins
Updated by Kyle Baird
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In Brief

  • IOSCO is exploring global standards for crypto regulation, addressing consumer protection lapses in the sector.
  • Proposed rules cover cross-border cooperation, custody, retail treatment, conflicts, and market manipulation.
  • The regulator's goal is for prompt adoption by 130 member countries, as EU's MiCA legislation increases regulatory pressure.
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The International Organization of Securities Commissions (IOSCO) has introduced a global strategy to outline a balanced regulatory arena for crypto assets and protection for investors.

This initiative aims to tackle mounting concerns over consumer protection and draw lessons from the downfall of the FTX exchange last year.

IOSCO Strategy Covers Various Aspects

The IOSCO guidelines are a remarkable advancement in response to increasing worries around the lack of crypto regulations. This could especially remove concerns about consumer safety and apply learnings from the FTX exchange debacle.

Since the FTX bankruptcy in Q4 2022, several other businesses have shut down from the liquidity crisis and regulatory action. And for an extensive period, crypto industry actors have called out for a unified regulatory matrix. Different jurisdictions apply crypto rules differently, creating disparities in treatment.

IOSCO Chair Jean-Paul Servais said the newly proposed standards would be a critical turning point. Servais believes they will mitigate the immediate risks to investors and market integrity. The recommendations include cross-border regulatory cooperation, custody of crypto assets, treatment for retail customers, conflicts of interest, and market manipulation.

IOSCO’s 18 prescribed measures for strong conflict-of-interest prevention within cryptocurrency transactions incorporate robust safeguards from conventional markets.

The leading international organization that unites securities regulators worldwide plans to finalize these standards by the end of the year. It expects its 130 member countries to promptly integrate these regulations into their respective rulebooks. The Board of the body comprises securities regulatory authorities from various countries. It includes Australia, Belgium, Brazil, China, the UK, Dubai, US, among other countries.

As per the report, the consultation process is currently underway, seeking public opinion on the proposed regulations.

Will the US Wake Up to New Rules?

Additionally, the plan comes as the European Union gets set to enact thorough regulations for the industry by mid-2024. Recent unanimous approval of the Market in Crypto-Assets (MiCA) legislation represents a significant step toward implementing stronger regulations. The business community thinks this should increase pressure on other countries, especially the U.S. Congress, to create regulatory frameworks.

According to ARK Invest‘s Yassine Elmandjra, regulatory uncertainty in the United States could be causing large trading businesses to scale back their participation. 

The analyst remarked that it is endangering the nation’s ability to innovate.

He claims that the U.S. may soon be overtaken by countries like the UAE and South Korea, among other top players competing for the global crypto leader title.

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Shraddha Sharma
Shraddha is an India-based journalist who worked in business and financial news before diving into the crypto space. As an investment enthusiast, she has also has a keen interest in understanding crypto from a personal finance standpoint.