Tech

FTX Crash: Global Regulators Set to Target Crypto Sector After Massive Platform Crash


The collapse of the FTX exchange has caused more urgency to regulate the crypto sector, and targeting such ‘consortium’ platforms will be the focus for 2023, the new president of the body said. Global securities watchdog IOSCO said in an interview.

Jean-Paul Servais said regulations electronic money platform can draw on principles from other areas dealing with conflicts of interest, such as at credit rating agencies and market benchmark aggregators, without having to start from scratch. head.

Cryptocurrencies like Bitcoin has been around for years but regulators have refused to jump in to write new rules.

But the explosion at FTXleaving an estimated one million creditors facing damages totaling billions of dollars, will help change that, Servais told Reuters.

“The sense of urgency is not the same as two or three years ago. There is some disagreement as to whether cryptocurrencies are a real problem at the international level because some think that it is still not a material and risky issue. ro,” Servais said.

“Things are changing and because of the alignment between different types of businesses, I think it’s important now that we can start a discussion and that’s where we’re going.”

IOSCO, the organization that coordinates the rules for the G20 countries and others, has set out guidelines for regulating stablecoins, but now the focus is shifting to the platforms that trade them.

In mainstream finance, there is a functional separation between activities such as brokerage, trading, banking and issuance, with each having its own set of codes of conduct and safeguards.

“Is that the case with the crypto market? I would say most of the time no,” Servais said.

Servais said crypto ‘conglomerates’ like FTX have emerged, performing multiple roles such as brokerage services, custody, proprietary trading, token issuance all under a single roof leading to a conflict of interest.

“For investor protection reasons, it is necessary to provide additional clarity to these crypto markets through targeted guidance in the application of IOSCO principles to crypto assets, ‘ Servais said.

“We plan to publish a consultation report on these issues in the first half of 2023,” he added.

Madrid-based IOSCO, or the International Organization of Securities Commissions, is the umbrella body for market watchdogs such as the Securities and Exchange Commission in the United States, Bafin in Germany, the Service Authority Finance Japan and the UK Financial Conduct Authority, all committed to implementing the body’s recommendations.

Servais, who is also chairman of the Belgian financial regulator FSMA, said the European Union’s new markets for crypto assets or the MiCA framework are an “interesting starting point” for development. global guide as it focuses on monitoring cryptocurrency miners.

“I think the world is changing. We know there’s some space to develop new standards for oversight of this kind of crypto syndicate. There’s a clear need,” Servais said.

© Thomson Reuters 2022


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