London: The crash of the FTX exchange has injected more urgency to regulate the crypto sector and targeting such ‘aggregate’ platforms will be a focus for 2023, the new chair of global securities watchdog IOSCO said in an interview. said
Jean-Paul Servais said that regulating crypto platforms could follow the rules of other sectors that handle conflicts of interest, such as among credit rating agencies and compilers of market benchmarks, from scratch. without doing
Crypto assets like bitcoin have been around for years but regulators have resisted jumping in to write new rules.
But the levy on FTX, which has cost an estimated 1 million borrowers billions of dollars in losses, will help change that, Servais told Reuters.
“The sense of urgency is not the same as it was two or three years ago. There are some conflicting opinions on whether crypto is a real problem internationally because some people believe it is still not a material problem and a threat, Servais said.
“Things are changing and because of the interconnectedness between different types of businesses, I think it’s important now that we can start the discussion and that’s where we’re going.”
IOSCO, which coordinates rules for G20 countries and others, has already set rules to regulate stablecoins, but attention is now turning to platforms that trade in them.
In mainstream finance there is functional separation between activities such as broking, trading, banking services and issuing, each with its own rules of conduct and safeguards.
“Is this the case for the crypto market? I would say mostly no,” Servais said.
Servais said that crypto ‘conglomerates’ like FTX have emerged, performing multiple roles such as brokerage services, custody, proprietary trading, token issuance under a single roof, creating conflicts of interest.
“For investor protection reasons, additional clarity needs to be provided to these crypto markets through targeted guidance in applying IOSCO’s principles to crypto assets,” Servais said.
“We intend to publish a consultative report on these matters in the first half of 2023,” he added.
The Madrid-based IOSCO, or International Organization of Securities Commissions, is an umbrella organization for market watchdogs such as the Securities and Exchange Commission in the US, Baffin in Germany, the Financial Services Agency of Japan, and the UK’s Financial Conduct Authority. All of whom commit to this. Apply the body’s recommendations.
The EU’s new Markets in Crypto Assets or MICA framework is an “interesting starting point” for the development of global guidance as it focuses on the supervision of crypto operators, said Servais, the Belgian financial regulator. He is also the head of FSMA.
“I think the world is changing. We know there is some room to develop new standards around the oversight of these types of crypto groups. There is a clear need,” Servais said.
