The International Organization of Securities Commissions (IOSCO) today released a statement stating that cryptocurrencies should be treated in the same way as traditional financial assets, such as stocks and bonds, as they are very similar.
The global watchdog included its position in 18 core recommendations for countries to help them develop or adjust regulatory policies for the crypto industry.
However, the watchdog’s stance contradicts politicians in the UK, who have called for crypto trading to be regulated, as are high-risk industries such as gambling.
The recommendations
IOSCO’s standards primarily address conflicts of interest, market manipulation, cross-border regulatory cooperation, custody of crypto assets, operational risks, and technology risks. The watchdog also commented on retail investor rights, including access, eligibility and distribution.
IOSCO said regulators should address cryptocurrencies within existing frameworks where possible and develop new ones if current systems are inadequate. The framework should cover “crypto-asset trading, other crypto-asset services, and the issuance, marketing, and sale of crypto-assets.”
According to the document:
“The regulatory approach should aim to achieve regulatory outcomes for investor protection and market integrity that are the same as, or consistent with, those required in traditional financial markets.”
In addition, the IOSCO said regulators should take a consistent global approach to the industry, as crypto companies often operate in multiple jurisdictions.
The watchdog urged regulators to “consider bilateral/multilateral cooperation outside the context of enforcement” to ensure these companies can be effectively controlled.
British approach to crypto
IOSCO’s first recommendation – to treat cryptocurrencies in the same way as traditional financial assets – is the opposite of what MPs in the UK recently suggested.
Some UK politicians have called for crypto trading to be regulated, as are high-risk industries such as gambling, after a Treasury Commission investigation concluded that crypto trading can be “addictive”.
According to a Guardian report, Treasury Committee Chairman Harriett Baldwin recently said:
“With no intrinsic value, massive price volatility, and no discernible social good, the consumer trade in cryptocurrencies like Bitcoin is more like gambling than a financial service, and should be regulated as such.”
In addition, the Treasury Commission believes that regulating the crypto industry, like financial services, would give it unwarranted legitimacy in the eyes of the public. There are concerns that FCA oversight could lead investors to believe the market is safe or that they will be protected from losses.
However, IOSCO believes:
“Given the similar economic functions and activities of the crypto asset market and traditional financial markets, many existing international policies, standards and legal regulatory frameworks apply to crypto asset activities.”
