What has happened?

The International Organization of Securities Commissions (IOSCO) has issued a consultation that describes the issues associated with cryptoasset trading platforms (CTPs) and setting out key considerations to help regulatory authorities in addressing these issues.

What does this mean?

In its consultation, Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms, the international policy forum for securities regulators describes the risks and issues that it has identified in respect of CTPs.

The consultation sets out key considerations to help regulatory authorities in evaluating CTPs within their regulatory framework.

The main topics covered are:

  • access to CTPs;
  • Safeguarding participant assets;
  • conflicts of interest;
  • operations of CTPs;
  • market integrity;
  • price discovery; and
  • technology.

Many of the issues related to the regulation of CTPs are the same as for traditional securities trading venues, "but may be heightened by how CTPs are operated", according to IOSCO.

"Where a regulatory authority has determined that a cryptoasset is a security and falls within its remit, the basic principles or objectives of securities regulation should apply," IOSCO said.

IOSCO added that the operational model a CTP adopted and the existing regulatory framework may determine the extent to which issues or risks exist, are relevant or have already been mitigated.

Recognising that the cryptoasset market is new and rapidly evolving, IOSCO said that the key considerations and toolkits put forward in the consultation "are not intended to suggest or mandate any particular regulatory action or requirement" and that they represent specific areas jurisdictions could consider when thinking about regulating CTPs.

"The toolkits are examples of measures that can be used by regulatory authorities to address the key considerations and the associated risks and issues," IOSCO said.

IOSCO said it will continue to monitor cryptoassets markets to ensure that the points identified in its consultation remain relevant and appropriate – an approach that is in line with the G20's 2018 call for international standard-setting bodies “to continue their monitoring of crypto-assets and their risks, according to their respective mandates, and assess multilateral responses as needed".

Comments are to be sent by 29 July 2019.

Next steps

If you want to take advantage of blockchain's huge potential and disruptive impact, while keeping track of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.

Receive free news and analysis – written by Hogan Lovells' world-leading legal teams and tailored to your preferences –  by registering on Engage. You can also access our cutting-edge interactive Lawtech tools, designed to help you make better decisions and save time and money.

 You can also keep track of all the Engage content by following our LinkedIn page.