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Global Regulators Will Target Crypto Platforms After FTX Crash

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by hu jones

LONDON (Reuters) – The FTX stock market crash has brought greater urgency to regulating the crypto sector and targeting such ‘conglomerate’ platforms will be a focus for 2023, the new chairman of global securities watchdog IOSCO said in a statement. an interview.

Jean-Paul Servais said regulating crypto platforms could draw on principles from other industries that deal with conflicts of interest, such as credit rating agencies and market benchmark compilers, without starting from scratch.

Crypto assets like bitcoin have been around for years, but regulators have resisted jumping in to write new regulations.

But the explosion in FTX, which saw an estimated one million creditors face losses totaling billions of dollars, will change that, Servais told Reuters.

“The sense of urgency is not the same even two or three years ago,” Servais said. There is dissenting opinion on whether crypto is a real problem internationally, as some believe it is still a material problem and not a risk. Is.”

“Things are changing and because of the interconnectedness between different types of companies, I think it’s important that we can start the discussion now and that’s what we’re going for.”

IOSCO, which coordinates regulations for G20 countries, among others, has already established principles for regulating stablecoins, but the focus is now on platforms that trade in them.

In the regular financial sector, there is a functional separation between activities such as brokering, trading, banking services and issuance, each with its own set of rules of conduct and safeguards.

“Is this the case for the crypto market? I would usually say no,” Servais said.

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Servais said crypto “conglomerates” like FTX have sprung up, performing multiple roles such as brokerage services, custody, proprietary trading, token issuance under one roof, giving rise to conflicts of interest.

“For investor protection reasons, it is necessary to provide additional clarity to the markets for these crypto markets through targeted guidance on how to apply IOSCO’s principles to crypto assets,” said Servais.

“We plan to publish the consultation report on these matters in the first half of 2023,” he said.

Madrid-based IOSCO, or the International Organization of Securities Commissions, is an umbrella body 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’s Financial Conduct Authority, all of which put committed to . Implement the recommendations of the agency.

Servais, who also chairs Belgian financial regulator FSMA, said the EU’s new market in crypto assets or the MiCA framework is an “interesting starting point” for developing global guidelines as it focuses on the oversight of crypto operators.

“I think the world is changing. We know that there is room to develop new standards regarding the oversight of this type of crypto group. There is clearly a need,” says Servais.

(Reporting by Hugh Jones; editing by Bernadette Baum)

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