Global regulators to target crypto platforms after FTX crash
November 24: The crash of FTX exchange has injected greater urgency into regulating the crypto sector and targeting such 'conglomerate' platforms will be the focus for 2023, the new chair of global securities watchdog IOSCO said in an interview with Reuters.
According to the news agency, IOSCO chair Jean-Paul Servais said regulating crypto platforms could draw on principles from other sectors which handle conflicts of interest, such as at credit rating agencies and compilers of market benchmarks, without having to start from scratch.
Cryptoassets like bitcoin have been around for years but regulators have resisted jumping in to write new rules. But the implosion at FTX, which left an estimated one million creditors facing losses totalling billions of dollars, will help change that, Servais told Reuters.
In a report published in early November, Reuters had said that at least one billion dollars of customer funds have vanished from collapsed crypto exchange FTX.
"The sense of urgency was not the same even two or three years ago. There are some dissenting opinions about whether crypto is a real issue at the international level because some people think that it's still not a material issue and risk," Reuters quoted Servais as saying.
"Things are changing and due to the interconnectivity between different types of businesses, I think it's now important that we are able to start a discussion and that's where we are going."
IOSCO, which coordinates rules for G20 countries and others, has already set out principles for regulating stablecoins, but now the focus is turning to platforms which trade in them.
According to Reuters, Madrid-based IOSCO, or International Organization of Securities Commissions, is an umbrella body for market watchdogs like the Securities and Exchange Commission in the United States, Bafin in Germany, Japan's Financial Services Agency, and the UK Financial Conduct Authority, who all commit to applying the body's recommendations.
"I think that the world is changing. We know there is some space for developing new standards about supervision of this kind of crypto conglomerates. There is an obvious necessity," Servais reportedly said.
It may be noted that Nepal Rastra Bank, the central bank of Nepal, has been issuing notices time and again warning the general public not to use crypto currency, arguing that transactions involving crypto currencies are not legally recognized in Nepal and are not guaranteed by the government
NRB says that the general public can be duped while dealing with crypto-currency. There is also the risk of capital flight, the NRB added.