The First Set Of Global Laws Marks Their Debut Into The Crypto Currency World- Will It Be Able To Protect Investment Money In The Intricate World Of Cryptos?

The crypto industry has been allowed to thrive on shaky ground, which must be rectified. So, finally, there marks the entry of a global set of rules to counter the terror attack on crypto assets globally. IOSCO, the international securities watchdog, has published the first global strategy for regulating crypto assets and digital markets based on lessons learned from the collapse of the FTX in 2022, which fueled consumer anxieties about consumer safety. As different governments follow their standards, the sector, which generally simply has to walk parallel with anti-money laundering processes, has been asking for a global approach to regulation.

The need for a global set of rules in the world of crypto-currency.

Apart from restrictions to prevent money laundering and terrorist funding, cryptocurrency enterprises are essentially unregulated in many areas of the world.

The steps come after crypto exchange FTX filed for bankruptcy in the United States in November, following a liquidity crisis that forced global authorities to intervene. The suggestions constitute a “watershed moment in addressing the obvious and immediate risks to investor protection and market integrity,” according to IOSCO Chair Jean-Paul Servais. 

The suggested guidelines include dealing with conflicts of interest, market manipulation, cross-border regulatory cooperation, crypto asset custody, operational hazards, and retail customer service. The 18 suggested procedures will use long-established protections from mainstream markets to avoid conflicts of interest between the several aspects of a cryptocurrency transaction.

The watchdog intends to complete the standards by the end of 2023, and its 130 members worldwide will use them to fill gaps in national rulebooks quickly.

What is IOSCO?

IOSCO is an umbrella organisation of regulators which includes the following.

• Securities and Exchange Commission of the US. 
• Financial Services Agency of Japan. 
• Financial Conduct Authority of the United Kingdom. 
• BaFin of Germany.

All of these are polling the public on the regulations.

The pioneer in setting the crypto rules.

The move comes after the European Union finalised the world’s first complete set of guidelines earlier this month, known as MiCA, putting pressure on the UK, the United States, and other nations to develop their standards.

It’s extremely commendable that Europe was able to get the rules done so rapidly, according to Hester Peirce, a Securities and Exchange Commission commissioner in the United States. People would come if they developed a competent regulatory framework. He believes it will be shown with MiCA. However, they are hitting themselves in the foot by not having a regulatory structure in the United States, according to Peirce. He added that the United States Congress must decide which regulatory agency has power over cryptocurrency.

The CFTC, the United States’ derivatives authority, is also keeping an eye on the industry as the need for clearer rules grows more important following the collapse of the crypto firm FTX last year. However, in the absence of other legal frameworks, EU standards will unavoidably function as worldwide norms until a global standard is agreed upon, according to Eva Gustavsson, head of public affairs at crypto company Copper. They are currently sipping from a virtual fire hose of regulation suggestions from around the world, mentions Gustavsson.

He believes it would be absurd for any company to believe they would not be required to comply with anything fairly rapidly. He adds that the increasing regulatory certainty will lead to more traditional institutional investors entering the crypto market to “mature it further.”

Conclusion.

FTX, valued at $32 billion a year ago, filed for bankruptcy on November 11, 2022. It is estimated that $8 billion in client cash went stolen. This is not something to be overlooked. According to FTX’s founder, “poor internal labelling” caused FTX to miscalculate leverage and liquidity. These considerations drove the need to create a universal set of standards for conducting transactions in the cryptocurrency realm.

Recent world events have displayed the importance of this effort. This is about ensuring that crypto is market-safe. Frameworks like IOSCO prevent illicit conduct while allowing everyone to benefit from the technology underpinning cryptocurrency.

Proofread & Published By Naveenika Chauhan