Within recent months, the International Organization of Securities Commissions (IOSCO) issued a consultation report proposing policy recommendations for crypto and digital asset markets. The Cardano Foundation has responded to these recommendations.
The policy recommendations of the IOSCO seek to strengthen crypto market integrity for enhanced investor protection and will potentially be implemented in Q4 2023. They center on trading crypto assets and settlements of crypto trades but do not focus on DeFi services and encourage regulation consistency across IOSCO jurisdictions.
Cardano’s Response
Firstly, Cardano holds that the policy recommendations must differentiate between blockchains and the decentralized applications that operate on top of them. The IOSCO consultation report groups together many crypto assets and activities that, while related, must be regulated differently. Cardano suggests that a more granular approach would be beneficial. Secondly, Cardano supports outcome-driven rules; regulation must support innovation, otherwise, any rules set to govern crypto development will be outpaced by innovation and become outdated.
Finally, Cardano, although agreeing with IOSCO’s principle of “same activity, same risk, same outcome” when comparing stock trading to crypto trading, holds that the utility of blockchain and crypto extends well beyond finance.
Conclusion
The Cardano Foundation acknowledges the necessity for regulation in the Web3 space. Such regulation will encourage institutional investment to spurn mass adoption. Cardano recognizes the IOSCO policy recommendations but stresses that suitable legislation, built on appropriate fundamentals, will foster innovation and not hinder it while reducing potential risks.
