FIA Supports IOSCO Recommendations on Crypto Regulation

FIA supported IOSCO’s recommendations to member jurisdictions on regulating crypto-asset activities under the fundamental principle "same business, same risks, same rules."

In its public comment, FIA responded to IOSCO's policy recommendations to "support jurisdictions seeking to establish compliant markets for the trading of crypto or ‘digital’ or ‘virtual’ assets." The recommendations are intended to promote international consistency in regulatory frameworks "given the cross-border nature of the markets, the risks of regulatory arbitrage and the significant risk of harm to which retail investors continue to be exposed."

FIA supported IOSCO’s proposed recommendations to:

• address risks arising from vertically integrated crypto-asset trading platform business models and posited that if vertically integrated market structures are to be allowed, regulators should ensure that the "consolidated structure protects customers and market integrity";
• require crypto-asset service providers ("CASPs") to (i) ensure adequate protection of client assets, (ii) segregate client assets from the CASP’s proprietary assets, such as in a trust, (iii) disclose how client assets are being safeguarded and (iv) implement procedures and policies to conduct regular reconciliations of client assets; and
• address cross-border risks and prevent money laundering by encouraging regulators to "adopt best practices in international cooperation."

FIA urged IOSCO to take care that specific recommendations do not "unduly prevent or hinder innovation."