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  • Writer's pictureDeborah

The Consultation Report was issued on May 23 by the International Organization of Securities Commissions (IOSCO) lays out 18 Policy Recommendations to ensure greater consistency in the regulatory frameworks applicable to cryptoassets activities, more specifically carried out by cryptoasset service providers (CASPs). The Consultation Report serves as a guide to relevant authorities that seek to establish a compliant cryptoassets market.

Taking a principled based approach IOSCO‘s recommendations seek to propose solutions to addressed key issues and risks related to the cryptoasset markets, notably:

  • Common standard of regulatory outcomes : Regulators should use existing frameworks or new Frameworks to regulate and oversee crypto-asset trading, other crypto-asset services, and the issuing, marketing and selling of crypto-assets (including as investments), in a manner consistent with IOSCO standards to achieve consistency in the regulatory outcomes.

  • Organizational governance : A CASP to have effective governance and organisational arrangements, commensurate to its activities, including systems, policies and procedures that would, amongst other things, address conflicts of interest, including those arising from different activities conducted, and services provided by a CASP or its affiliated entities.

  • Disclosure of role, capacity and trading conflicts :These disclosures should be made, in plain, concise, non- technical language, as relevant to the CASP’s clients, prospective clients, the general public, and regulators in all jurisdictions where the CASP operates, and into which it provides services.

  • Order handling: A CASP acting as an agent, should handle all client orders fairly and equitably by having systems, policies and procedures to provide for fair and expeditious execution of client orders, and restrictions on front running client orders.

  • Trade disclosures: A CASP that operates a market or acts as an intermediary (directly or indirectly on behalf of a client) should provide pre- and post-trade disclosures in a form and manner that are the same as those that are required in traditional financial markets

  • Admission to trading: A CASP should establish, maintain and appropriately disclose to the public its standards— including systems, policies and procedures— for listing / admitting crypto assets to trading on its market, as well as those for removing crypto-assets from trading.

  • Management of primary markets conflicts: A CASP should manage and mitigate conflicts of interest surrounding the issuance, trading and listing of crypto-assets.

  • Fraud and market abuse:Regulators should bring enforcement actions against offences involving fraud and market abuse in crypto-asset markets.

  • Market surveillance: Regulators should have market surveillance requirements applying to each CASP, so that market abuse risks are effectively mitigated.

  • Management of material non-public information:CASP to put in place systems, policies and procedures around the management of material non-public information

  • Enhanced regulatory cooperation:This includes having available cooperation arrangements and/or other mechanisms to engage with regulators and relevant authorities in other jurisdictions.

  • Overarching custody recommendation: By applying the IOSCO Recommendations Regarding the Protection of Client Assets.

  • Segregation and handling of clients monies and assets: A CASP should place client assets in trust, or segregate them from the CASP’s proprietary assets.

  • Disclosure of custody and safekeeping arrangements: To be made by a CASP in clear, concise and non-technical language.

  • Client asset reconciliation and independent assurance: A CASP should have systems, policies, and procedures to conduct regular and frequent reconciliations of client assets subject to appropriate independent assurance.

  • Securing client money and assets: A CASP should adopt appropriate systems, policies and procedures to mitigate the risk of loss, theft or inaccessibility.

  • Management and disclosure of operational et technological risks:A CASP should comply with requirements pertaining to operational and technology risk and resilience in accordance with IOSCO’s Recommendations and Standards.

  • Retail client appropriateness and disclosure:A CASP should operate in a manner consistent with IOSCO’s Standards regarding interactions and dealings with retail clients. Implement adequate systems, policies and procedures.

Responses are to be provided to by 31 July 2023.

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