The Board of the International Organization of Securities Commissions (IOSCO), today published a report that describes the issues and risks associated with crypto-asset trading platforms (CTPs) and sets out key considerations to assist regulatory authorities in addressing these issues.
The development of crypto-assets is an important area of interest for regulatory authorities around the world and has been identified in the IOSCO work program as an on-going Board priority in 2020. The report published today, titled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms, describes the issues that IOSCO has identified regarding CTPs. The report sets out key considerations intended to assist regulatory authorities in evaluating CTPs within the context of their regulatory frameworks.
The key considerations relate to:
• Access to CTPs,
• Safekeeping of participant assets, including custody arrangements,
• Identification and management of conflicts of interest,
• Transparency of operations,
• Market integrity, including the rules governing trading on the CTP, and how those rules are monitored and enforced,
• Price discovery mechanisms,
• Technology, including resiliency and cybersecurity.
Many of the issues related to the regulation of CTPs are common to traditional securities trading venues but may be heightened by the business models used by CTPs. Where a regulatory authority has determined that a crypto-asset is a security and falls within its remit, the basic principles or objectives of securities regulation should apply. Accordingly, the report states that the IOSCO Principles and Methodology provide useful guidance for regulatory authorities considering the identified issues and risks.
IOSCO will continue to monitor the evolution of the markets for crypto-assets to ensure the issues, risks and key considerations identified in this report remain relevant and appropriate. IOSCO delivered the consultation report to the G20 meeting in Osaka in June 2019. The G20 issued a final communique that welcomed the “on-going work by the Financial Stability Board (FSB) and other standard-setting bodies and asked them to advise on additional multilateral responses as needed.”
To prepare this report, IOSCO issued a consultation report based on a survey of the regulatory approaches to CTPs that member jurisdictions are currently applying or considering. The final report draws on the responses to this consultation and includes a summary of the survey´s findings.