How the worldwide securities regulatorย ofย theย marketsย will implement the regulations isย still uncertain, industry observers say.
Industry stakeholders have largely welcomed new norms for the cryptocurrency sector proposed by the International Organization of Securities Commissions (IOSCO) on Wednesday โ but are uncertain how the regulations will look in effect.
The regulatorโs 18 policy recommendations for the worldwide cryptocurrency industry cover a range of issues including market abuse, conflict of interest and consumerย safety โ and are designed to contribute to a larger effort by international bodies to supervise what regulatoryย authorities see as an unstable financial market.
Regulatoryย authorities aroundย theย globe have so far taken diverging approaches to addressing the sector, ranging from outright bans in countries like China and legal crackdowns in the Unitedย States, to setting up licensing regimes like the Markets in Cryptocurrency Assets (MiCA) regulation in the European Union.
For cryptocurrency stakeholders, universal standards for the sector are a welcome signal.
โThe new blueprint from IOSCO is a shot in the arm for regulatoryย authorities worldwide to move towards a more harmonized system,โ Antoni Trenchev, co- founder of cryptocurrency trading platform Nexo stated in a statement.
Regulatoryย authorities aroundย theย globe โshould be able to examineโ compliance of cryptocurrency transactions or holdings at any time, stated Haydn Jones, worldwide lead of blockchainย tech and cryptocurrency solutions at financial advisor Kroll.
โPutting in place the frameworks to do so is a critical step toย beย ableย toย guard against criminal activity, but likewise to allow for everyone to takeย advantageย of the underlying technology that digitalย currencies rely on,โ Jones stated in a statement.
The recommendations likewise push forward the creation of โa baseline for cross-border standards that can be built upon,โ stated Chris Woolard, a regulations expert at blockchainย tech platform EY, in an emailed statement to CoinDesk.
In practice
Cross-jurisdictional cryptocurrency regulation isย already overdue, but how effective it will be in practice remains to be seen, reportsย by Woolard.
Those in traditional finance, who have seemingly taken a step back from entering cryptocurrency markets following the dramatic market collapse aย yearย ago, may likewise need some convincing.
โ Despiteย theย factย that the objective of these proposed recommendations is to safely integrate the cryptocurrency sector into mainstream finance, the exact consequences and execution are isย still to be determined,โ Rajeev Bamra, senior vice president at Moodyโs Investors Service, stated in a statement.
โ Still they hold theย capacity to shape the regulation and oversight of the cryptocurrency industry in wholeย lotย of ways,โ Bamra added.
DeFi
Bamra likewise noted how IOSCOโs recommendations, spearheaded by the Unitedย Kingdom Financial Conduct Authority (FCA) as part of the worldwide bodyโs fintech task force, did not address decentralizedย financeย (DeFi), which is set to be separately looked at by the Unitedย States Securities and Exchange Commission.
Althoughย while Bamra stated Decentralizedย Finance norms, once released, โcould help increase investor confidence, decrease exposure to dangers, and promoteย ย more consistent regulationโ across jurisdictions, Chris Perkins, president and managing partner at financing company CoinFund, commended IOSCO for not โcomminglingโ Decentralizedย Finance in its policy paper covering cryptocurrency investment service providers.
โ Thereย is always going to be a tension in the cryptocurrencyย market betwixt the nature of cryptocurrency โ a decentralized technology, sitting over the traditional jurisdictional borders, taking dangers, pushing technological boundaries โ and a desire from governments to implement regulations toย guard consumers,โ stated Will Charlesworth, cryptocurrency assets partner at U.K.-based Keystone Law.
IOSCO will accept public feedback on its proposed recommendations until July 31.
Aoyon Ashraf.
