On July 31, the International Organistation of Securities Commissions (IOSCO) officially closed its call for public comment on its Policy Recommendations for Crypto and Digital Asset Markets. Industry participants were invited to provide input across the areas of conflicts of interest, market manipulation, cross-border regulatory cooperation, custody, operational risks and treatment of retail customers, as well as IOSCO’s views on stablecoins.
DCGG welcomes IOSCO’s initiative in seeking views on its proposed recommendations, and have put forward the following policy positions:
• An outcomes-based regulatory approach would be effective if there is understanding of the various business models, consideration of risk levels for different products and services, clear taxonomy, and ongoing cooperation with the crypto-asset industry.
• Mitigation of conflicts of interest should be conducted by CASPs through sets of practices such as establishing a code of conduct that promotes transparency, fairness, and independence, adequately training staff to identify and manage conflicts, and having an independent oversight body to monitor activities and investigate conflicts of interest.
• We discourage measures such as restricting certain activities within affiliated entities that could hinder growth. CASPs should not be restricted in offering various services, as long as they adhere to sound internal governance practices, clearly disclose the nature of their services, and enforce specific risk mitigation measures to protect consumers.
• Further clarity is needed regarding rules governing CASPs’ ‘proprietary crypto-assets’ and determining ‘material interest’ in primary market activity. There should be equality of treatment of all market participants, so that upcoming standards are able to ensure proper risk mitigation.
• Regulators should avoid a generalized approach to different types of stablecoins, but rather introduce a more detailed classification based on various factors such as business models, mechanisms used, and inter-ecosystem differentiation, to enable a more effective and future-proof framework and achieve desired regulatory outcomes.
IOSCO aims to put forward a finalized set of recommendations by Q4, 2023 and the objective of these is to influence the future policies on centralised crypto-asset markets of the IOSCO members.
See DCGG’s full response here.