Cryptocurrency regulator IOSCO to focus on 2023

The crash of FTX exchange has injected greater urgency into regulating the sector and targeting such 'conglomerate' platforms will be the focus of 2023, according to the new chair of global securities watchdog IOSCO.

Jean-Paul Servais said that regulated platforms could draw on principles from other sectors that handle conflicts of interest, such as credit rating agencies and compilers of market benchmarks, without having to start from scratch.

For years, cryptocurrencies likeBitcoin have been around but regulators have resisted jumping in to write new rules.

An estimated one million creditors facing losses totalling billions of dollars is going to be changed by the implosion at FTX, according to Servais.

The sense of urgency was not the same as it was two or three years ago. There are some dissenting opinions about whether or not cryptocurrencies are a real issue at the international level because some people think it's still not a material issue and risk, Servais said.

I think it is important to start a discussion because things are changing due to the interconnectivity between different types of businesses. The IOSCO, which coordinates rules for G 20 countries and others, already has set out principles for regulating stable coins, but now the focus is on platforms that trade in them.

There is a separation between activities like broking, trading, banking services and issuance, with each having its own set of conduct rules and safeguards.

Is it true that the market for cryptocurrencies is affected by this? Most of the time, I would say that.

FTX, a conglomerates like them, have emerged, performing multiple roles, such as brokerage services, custody, proprietary trading, issuance of token, all under a single roof that give rise to conflicts of interest, Servais said.

It's important to provide additional clarity to these markets markets because of the guidance given by IOSCO's principles to apply to cryptocurrencies, according to Servais.

He said that we intend to publish a consultation on these matters in the first half of 2023.

Madrid-based IOSCO, or International Organization of Securities Commissions, is an umbrella body for market watchdogs like the Securities and Exchange Commission in the United States, Bafin in Germany, Japan's Financial Services Agency, and the UK Financial Conduct Authority, all of whom commit to applying the body's recommendations.

The European Union's new markets in the MiCA framework is an interesting starting point for global guidance, as it focuses on supervision of operators of criptocurrencies, said Servais, who also chairs Belgium's financial regulator FSMA.

I think the world is changing. There is room for new standards about supervision of this kind of criptocurrency conglomerates. There is an obvious necessity, according to Servais.