Global Regulators Want To Clip Crypto Platforms Like Binance

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 International Organization of Securities Commissions (IOSCO) said in an interview with Huw Jones of Reuters.

Photo Insert: Reuters had already reported how Binance, the world’s largest crypto exchange, was able to launder $2.35 billion in dark money in five years.

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.

Crypto assets 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 totaling billions of dollars, will help change that, Servais told Reuters.

"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," Servais said.

"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 that trade in them.

In mainstream finance, there is a functional separation between activities like broking, trading, banking services, and issuance, with each having its own set of conduct rules and safeguards.

"Is it the case for the crypto market? I would say most of the time not," Servais said.

Reuters had already reported how Binance, the world’s largest crypto exchange, was able to launder $2.35 billion in dark money in five years. Crypto 'conglomerates' like FTX have emerged, performing perform multiple roles such as brokerage services, custody, proprietary trading, issuance of tokens all under a single roof that give rise to conflicts of interest, Servais said.

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