According to a recent report, the International Organization of Securities Commission (IOSCO), is preparing to launch a consultation regarding its report on crypto regulation. Sources reveal that the international agency is planning to launch the consultation in the second quarter of 2023.
The IOSCO is an association of securities and futures regulators with 35 regulators and top executives on its board. Some of the significant members include the heads of the United States Commodity Futures Trading Commission (CFTC), the U.S. Securities and Exchange Commission (SEC), and the United Kingdom Financial Conduct Authority (FCA) among others.
While the consultation is expected to launch in the second quarter of the year, the final recommendations from the organization are anticipated to be published by the end of 2023.
Additionally, the dates are scheduled in IOSCO’s work program for 2023–24. Notably, two major workflows are dedicated to decentralized assets in the organization’s Fintech Task Force plan. While the first covers crypto and digital assets, the second covers the larger decentralized finance (DeFi).
According to the announcement, the DeFi consultation will start in the third quarter of 2023. In addition, the work program text states that in both areas of the digital market, IOSCO will focus on investors’ protection. Quoting the text:
Through the outcomes of its work, IOSCO seeks to support the development of sustainable and innovative capital markets, while enhancing investor protection, maintaining market integrity, and reducing systemic risk.
Prior to this, IOSCO published reports on DeFi, stablecoins, and influencers in 2022. The supervisory capacities that the IOSCO recommends national regulators acquire include regulatory channels to report consumer complaints for misleading and illegal promotions, and evidence-tracking processes to cope with the fast pace and changing nature of online information.
In the context of DeFi, the organization urged national regulators to take “a granular and holistic understanding of the DeFi market,” which could enhance their ability to create relevant legislation. The 2022 report on stablecoins was delivered by the IOSCO and the Bank for International Settlements.
Both bodies settled on defining the stablecoin arrangement as it “combines a range of functions to provide an instrument that purports to be used as a means of payment and/or store of value.”
The IOSCO has a major role in developing, implementing, and promoting adherence to internationally recognized standards for securities regulation. It works intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda.
Crypto regulation is among the most significant demands on the table of regulators across the globe. In such a case, IOSCO’s timeline comes as a relief to the investors and industry participants who have repeatedly urged for action.
Additionally, the association of regulators creates more chances of clarity and efficiency for uniform regulation. Several authorities have quoted that absence or differences in the regulation would maximize the chances of failure. Importantly, with SEC and CFTC working in the same group, the constant request from the CFTC heads for cooperation from SEC is also solved.
The SEC has been consistently criticized for its regulation-by-enforcement approach toward crypto. Lawmakers and industry experts have also opined this approach is driving away innovation. In the past months, the SEC has been on an enforcement spree and has initiated actions against numerous crypto firms.