- The FTX collapse has injected urgency to regulate the global crypto industry.
- The crypto exchange’s collapse left over a million creditors with losses in billions of dollars.
- IOSCO association laid forth guidelines for managing stablecoins.
The FTX collapse calls for urgent action to establish international laws for the crypto industry. In an interview, the new chair of the international securities watchdog IOSCO, Jean-Paul Servais, stated that the goal for 2023 is to target such “conglomerate” platforms.
According to Servais, setting regulations for crypto platforms might use established guidelines and standards for other industries that deal with conflicts of interest, such as credit rating services and market benchmark compilers, without starting from scratch.
Regulators have resisted writing new regulations despite the existence of cryptos like Bitcoin for years.
According to Servais, this will change as the collapse of FTX left an estimated one million creditors with losses of billions of dollars.
Servais said,
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,
Furthermore, he added that going forward, regulators would be crazy not to address such issues because of the existing complacencies out there.
International regulators are starting to take crypto platforms more seriously as the FTX collapse has shown how much money can be lost if proper regulations aren’t implemented.
IOSCO assists in coordinating regulations for the G20 as well as other nations. The association already laid forth guidelines for managing stablecoins, but they now want to concentrate on the exchanges that deal with them.
As per Servais, after the emergence of crypto “conglomerates” like FTX with several functions, including brokerage services, custody, proprietary trading, and the issue of tokens performed under one roof, conflicts of interest are bound to arise.
Servais, who also serves as the chair of Belgium’s financial regulator FSMA, believes that the MiCA framework of the European Union is an “interesting starting point” for creating global advice as it focuses on the supervision of crypto operators.
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