The collapse of the FTX.com cryptocurrency exchange renewed concern about the cryptocurrency market and the need to regulate it as soon as possible. In this sense, the year 2023 will be a decisive year for setting new rules of the game that will lead to more supervision and control over these markets, which until now have been semi-regulated.
According to the head of the global securities regulator IOSCO, Jean-Paul Servier, regulation of digital assets does not have to start from scratch. In an interview with Reuters, Servier suggested taking certain principles from other conflict-of-interest sectors.
The official suggests examining the rules governing credit rating agencies and market standards compilers. Despite the rapid expansion of the cryptocurrency market and the problems that have arisen with its trading, the crypto space has so far remained unregulated.
However, the scale of the crisis unleashed this year by the collapse of cryptocurrency prices and the bankruptcies of several major digital money trading and lending companies has increased the need to intervene in the market and write new rules.
The sense of urgency has changed
Service said the massive loss of funds from nearly a million customers of FTX, the Sam Batman-Fried platform that collapsed due to management mismanagement, is helping change regulators’ perspective on the crypto industry.
“The sense of urgency was not the same even two or three years ago,” he said. “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.” Servais specified.
However, he noted that this is changing due to the “interconnectedness of different types of businesses” so he considers this is the right time to “start a discussion and that’s where we go”.
Cryptocurrency markets need a guide
The International Organization of Securities Commissions (IOSCO) brings together regulators from the world’s most industrialized countries, including members of the G20. The authority has already established principles for regulating stablecoins and will now focus on trading platforms.
Servais explained that unlike the traditional financial system, where the activities of each sector are segregated and governed by their own set of rules of behavior and consumer protection, this is not the case for the most part in the cryptocurrency market.
The official noted the emergence of cryptographic “clusters” such as FTX where these functions are not separate. He pointed out that trading, brokerage, asset custody and token issuance services are provided on an equal footing on these platforms, which leads to conflicts of interest.
He added that in order to protect investors, specific guidelines should be published allowing the IOSCO principles to be applied to digital money trading as well. In this way, cryptocurrency markets will be able to count on greater clarity of their operations.
The discussion about the global guide to regulating the crypto market can start from the regulatory framework of mica Service said that the digital assets proposed by the European Union. This law focuses on supervising cryptocurrency trading operators.