October 21, 2019

October 21, 2019

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Crypto-Asset Regulation Attracts The Attention Of Global Securities Regulators

On 28 May 2019, the International Organization of Securities Commissions (IOSCO) published Consultation Paper CR02/2019 (Paper), which identifies the risks and regulatory considerations associated with the trading of crypto-assets on crypto-asset trading platforms (CTPs). The Paper seeks input from industry participants amid a growing demand for an international approach to the regulation of crypto-assets, recently illustrated by the G20’s joint request for global regulators to monitor risks and consider multilateral responses in relation to crypt-assets as needed.

The Paper sets out some of the key issues that regulators should consider in relation to monitoring CTPs, however, it does not prescribe specific regulatory actions that domestic regulators should take. The key considerations identified by the Paper include safeguarding investors’ assets, dealing with access to crypto-asset trading platforms, ensuring market integrity and identifying and managing conflicts of interest.

The Paper also highlights the need for appropriate cooperation and communication between regulators to ensure investors are protected, particularly where the operations of CTPs span multiple jurisdictions.  Many regulatory authorities already have bilateral memorandums of understanding in place with other regulatory authorities that facilitate information sharing.

In preparing the Paper, IOSCO undertook a survey of a number of domestic regulatory bodies to determine how regulators are currently dealing with the emerging industry, with the majority of respondents reporting that they are applying their existing regulatory framework to CTPs. Notably, IOSCO states that where a domestic regulator determines that a crypto-asset falls within its remit, the basic principles and objectives of securities regulation should apply. Following the release of the Paper, the Australian Securities and Investments Commission updated Information Sheet 225, which provides guidance on how Australia’s legislation might apply to CTPs operating in Australia.

This post features contributions from Andrew Fay.

Copyright 2019 K & L Gates

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About this Author

Jim Bulling, KL Gates, financial services lawyer, funds management attorney
Partner

Mr. Bulling's practise focuses on banking and financial services and he acts for a range of entities in the financial services and funds management industry. His clients include Australian and international investment managers, banks, trustees of superannuation funds, wholesale and retail investment trusts, funds management companies and financial planning groups.

His main areas of focus include banking and financial product disclosure issues, financial services compliance issues, financial product distribution issues and superannuation and...

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Edwin Tan, KL Gates, investment fund attorney
Lawyer

Mr. Tan is a commercial and regulatory lawyer with a focus on the financial services industry. He advises on a range of Australian regulatory and compliance issues relevant to FinTechs, fund managers, financial advisers and other financial services entities.

Mr. Tan also provides advice on governance and compliance measures targeted at the prevention of bribery, corruption and anti-money laundering.

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