Global Securities Regulator IOSCO Declines Bespoke Stablecoin Rules, Prioritizes Accountability for Crypto Influencers

November 20, 2023 BACK TO NEWS

The International Organization of Securities Commissions (IOSCO), a key influencer in setting global standards for securities markets, has rejected calls from the crypto industry for a tailored regulatory framework for stablecoins. In a set of recommendations released on Friday following a consultation period initiated in May, IOSCO aimed to establish a cohesive global regulatory response to the challenges posed by crypto asset service providers (CASPs) among its member jurisdictions.

IOSCO emphasized that the risks associated with CASPs, including market abuse, conflicts of interest, client asset protection, and disclosure, mirror those observed in traditional financial markets. Tuang Lee Lim, Chair of IOSCO's financial task force, asserted that the regulatory approach aligns with the organization's established principles and standards for securities markets regulation.

The recommendations notably addressed concerns raised by various stakeholders regarding the accountability of financial influencers operating in the crypto space. In response, IOSCO recommended that regulators collaborate with relevant authorities to ensure precise disclosure of crypto promotions. This includes detailed information about the promoted product or service, along with associated risks. CASPs were also urged to disclose any commercial arrangements with individuals providing investment advice on crypto assets traded on their platforms.

Despite calls from blockchain industry associations for a specialized regulatory regime for stablecoins, arguing that existing requirements would be burdensome, IOSCO rejected this proposal. The organization emphasized that its regulatory rules would be applicable to stablecoins, reinforcing the idea of a unified regulatory framework for the broader crypto industry.

As IOSCO acts as the international policy forum for securities regulators, its decisions and recommendations carry significant weight, covering over 95% of the world's securities markets across approximately 130 jurisdictions. The rejection of bespoke stablecoin regulation underscores IOSCO's commitment to applying consistent regulatory principles to emerging sectors within the financial markets, promoting a level playing field and investor protection.