The watchdog aims to improve global standards of regulation to ensure investor protection and market integrity. The crypto industry is notoriously volatile, as the current global regulatory framework pays mind only to anti-money laundering compliance. 

The recommendations seek to influence global cooperation to regulate the crypto asset market. This is since global standards are crucial to regulate a currency that is global in nature.

The 18 proposed recommendations made across six key areas by IOSCO will call for greater client asset protection, along with cracking down on market manipulation, conflicts of interest, as well as strengthening cross-border cooperation. 

IOSCO has over 130 members which regulate more than 95% of the world’s securities markets, making it well-positioned to deliver globally consistent policy recommendations. Once the recommendations are finalised, jurisdictions are expected to update their regulatory frameworks accordingly. 

Jean-Paul Servais, Chairperson of IOSCO said: “The time has come to put an end to the regulatory uncertainty that characterises crypto activities. Today’s consultation paper received unanimous support from the IOSCO Board and is the outcome of an intense period of regulatory risk analysis, information sharing and capacity building. As such, it will mark a turning point in addressing the very clear and proximate risks to investor protection and market integrity risks.”

The recommendations come in the aftermath of last year’s collapse of the FTX exchange, which exposed an $8 billion (£6.4bn) hole in FTX’s accounts, leaving investors without access to their funds. 

Recently, the EU parliament overwhelmingly approved comprehensive rules for its crypto market. The rules, which will be rolled out in 2024, require crypto asset issuers in all 27 EU member states to be licensed, and puts the issuers on the hook for lost investor assets. 

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“Crypto-asset service providers need to address unacceptable conflicts of interest and take far more seriously the right of clients to have their monies and assets carefully minded and accounted for,” said Lim Tuang Lee, Chairperson of the IOSCO Board-Level Fintech Task Force. “It is time for Regulators to work together across borders and various jurisdictions to ensure that investor protection and market integrity are upheld in crypto-asset markets.”