Increased “sense of urgency” for crypto regulation
24 Nov 2022
Calls are increasing for the regulation of the cryptocurrency sector, with a greater sense of urgency following the collapse of the FTX exchange.
Chair of global securities watchdog IOSCO, Jean-Paul Servais said during a recent interview that the regulation of crypto platforms could be founded on the principles used in other sectors, such as credit rating agencies, without having to establish regulations from scratch.
Although they’ve been around for a number of years, regulators haven’t devised new rules for cryptocurrencies such as Bitcoin. Yet this may all change following the FTX collapse, Servais told Reuters news agency.
“The sense of urgency was not the same even two or three years ago. 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,” he said.
“Things are changing and due to the interconnectivity between different types of businesses, I think it's now important that we are able to start a discussion and that's where we are going,” he added.
Although IOSCO has outlined principles for the regulation of stablecoins, the onus is now on the platforms.
Such crypto 'conglomerates' like FTX carry out numerous roles, such as custody, token issuance and brokerage services, which can lead to conflicts of interest, Servais added.
“For investor protection reasons, there is a need to provide additional clarity to these crypto markets through targeted guidance in applying IOSCO’s principles to crypto assets.
“We intend to publish consultations report on these matters in the first half of 2023.
"I think that the world is changing. We know there is some space for developing new standards about supervision of this kind of crypto conglomerates. There is an obvious necessity," Servais added.
In addition, deVere CEO and founder Nigel Green has long been an advocate for the regulation of the crypto sector: “A robust, regulatory framework will help to protect investors, strengthen the sector itself, tackle crypto criminality and reduce the likelihood of disrupting global financial stability, not to mention providing a potential long-term economic boost to those countries which introduce it,” he has been quoted as saying.
Servais concluded that the EU’s new markets in crypto assets or MiCA structure is an “interesting starting point” for the development of guidance, Reuters reports.