In May 2023, the International Organization of Securities Commissions (IOSCO) unveiled a consultation report, proposing 18 policy recommendations aimed at crypto and digital asset markets. These recommendations are designed to bring about consistency in regulatory frameworks across IOSCO’s member jurisdictions. The overarching goal is to address the challenges tied to market integrity and the protection of investors in the burgeoning crypto sector.
The Cardano Foundation, known for its commitment to advancing the Cardano blockchain and its applications, didn’t miss the opportunity to weigh in on these recommendations. As an influential entity in the crypto space, the Foundation’s perspective offers valuable insights into how industry leaders view the proposed regulatory changes.
The call for a clear distinction between blockchain infrastructure and its myriad applications is at the heart of the Cardano Foundation’s response. While it commends IOSCO for adopting an activities-based approach, it believes that a more nuanced, function-focused categorization would offer stakeholders a clearer roadmap. Such granularity, it argues, would ensure that the unique attributes and potential of different blockchain applications are adequately recognized and regulated.
Another significant point raised by the Foundation is the need for functional and outcome-driven regulations. The blockchain and crypto sectors are characterized by rapid innovation. In such a dynamic environment, prescriptive rules can quickly become outdated, potentially stifling innovation. The Cardano Foundation advocates for a flexible, risk-based regulatory framework. Such an approach would be agile enough to adapt to the fast-paced changes in the industry while ensuring that potential risks are addressed proportionately.
IOSCO’s principle of “same activity, same risk, same outcome” also drew the Foundation’s attention. While the Foundation agrees with the essence of this principle, it highlighted a common oversight in the broader industry discourse. Blockchain technology, it argues, is often viewed predominantly through the prism of financial risk. While the financial implications are undeniable, the Cardano Foundation believes that the potential of blockchain transcends financial use cases. The technology can revolutionize various sectors, and regulations should be broad-based enough to recognize and facilitate this potential.
In wrapping up its response, the Cardano Foundation reiterated the importance of regulations supporting innovation. It believes that the crypto and blockchain sectors hold immense promise and that the right regulatory environment can catalyze their transformative potential. Finally, it points out that regulations based on sound principles allow the industry to foster innovation while minimizing potential risks and societal costs.