IOSCO Proposes Nine Policy Recommendations for Decentralized Finance and Crypto Regulation
Summary:
The International Organization of Securities Commissions (IOSCO) has unveiled nine policy recommendations focusing on promoting consistency of regulatory oversight within and across jurisdictions. The suggestions address the regulation of the DeFi, crypto, and digital asset markets, countering the belief that decentralized systems cannot be regulated. IOSCO aims to refocus on observing, consolidating regulatory capacities, and rendering technical assistance to its over 130 member authorities that regulate around 95% of the global financial markets.
On December 19, the International Organization of Securities Commissions (IOSCO) published nine policy recommendations aimed at harmonizing regulatory oversight across various jurisdictions. These recommendations were the culmination of a process that commenced with a report issued earlier in the year. Though they may not appear revolutionary - for instance, Recommendation 7 is "Enforce relevant laws" - their specificity is key. In addition, under Rule 7, the guidelines encompassed various tactics that a DeFi or any other market actor could employ in an attempt to circumvent regulations and advised regulators to assess their capabilities, tools, and resources accordingly.
The IOSCO is also aiming to standardize the regulation of cryptocurrency markets and conventional securities markets by adhering to the principle of 'identical activity, identical risk, identical regulation/regulatory outcome.' The regulatory body unveiled its policy recommendations for DeFi and a series of regulations for cryptocurrencies and digital assets in November. Furthermore, it elaborated on how the two recommendations should be synchronized, depending on the regulated entity's level of decentralization.
Contrary to some assertions within the industry that decentralized systems cannot be regulated, Recommendation 2 (Identify responsible entities) of the report stated that even within highly decentralized governance structures, there is usually one or more person(s) who exercise significant control or influence over product offerings, provision of services, or engagement in activities. Following the completion of its recommendations, the IOSCO has planned to refocus its efforts on observing, improving regulatory capacities, and providing technical support to its members. With a membership that extends to over 130 authorities, the IOSCO regulates about 95% of the global financial markets.
Published At
12/20/2023 12:30:00 AM
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