The collapse of FTX exchange has enhanced the urgency of regulating the crypto market, and the new chair of global securities watchdog IOSCO said in an interview that targeting such “conglomerate” platforms will be the focus for 2023.
According to Jean-Paul Servais, regulating crypto platforms could draw on principles from other sectors that deal with conflicts of interest, such as credit rating agencies and market benchmark compilers, without having to start from scratch.
Crypto assets such as bitcoin have been available for years, but authorities have been hesitant to develop new rules.
However, the implosion of FTX, which left an estimated one million creditors facing billions of dollars in losses, will help change that, according to Servais.
“The sense of urgency was not the same even two or three years ago. 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 said.
“Things are changing and due to the interconnectivity between different types of businesses, I think it’s now important that we are able to start a discussion and that’s where we are going.”
Although the fundamentals for regulating stablecoins have already been set by IOSCO, which coordinates regulations for the G20 and other countries, focus is now shifting to the platforms which trade in them.
In mainstream finance, operations such as broking, trading, banking services, and issuance are functionally separated, with each having its own set of conduct rules and protections.
IOSCO, or the International Organization of Securities Commissions, is a Madrid-based umbrella organization for market watchdogs such as the Securities and Exchange Commission in the United States, Bafin in Germany, Japan’s Financial Services Agency, and the UK Financial Conduct Authority, all of which have committed to implementing the body’s recommendations.
According to Servais, who also heads Belgium’s financial regulator FSMA, the European Union’s new markets in cryptoassets framework, or MiCA framework, is an “interesting starting point” for generating global advice because it focuses on supervision of crypto operators.
Servais said “I think that the world is changing. We know there is some space for developing new standards about supervision of this kind of crypto conglomerates. There is an obvious necessity.”