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International Organization of Securities Commissions (IOSCO) Calls for Tighter Oversight of ‘Ultimate Influencers’

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The Board of Directors of the International Organization of Securities Commissions (IOSCO) believes that regulators at both the national and international levels need more strength to meet the growing risks and challenges of “digitizing retail marketing and distribution”.

In her report, published On October 12, the International Organization of Securities Commissions (IOSCO) proposes measures that member states should consider when determining their approach to policy and enforcement for retail offerings and online marketing, given the new challenges that arise with the proliferation of crypto assets.

Speaking about these risks, the report focuses on the use of behavioral and manipulative methods, and pays special attention to influencers who are involved in the marketing of cryptocurrencies, calling them “ultimate influencers.” Another concept the report cites is the “digital veil”. According to IOSCO Secretary General, Martin Moloney:

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Digital fraudsters can hide behind a ‘digital veil’ that makes it difficult for regulators to locate, identify and take action against them.

The measures themselves are not new. IOSCO is proposing to require the administration of crypto products to take responsibility for the accuracy of information provided to potential investors on social media and to implement “appropriate filtering mechanisms” for financial consumers on board.

The suite of supervisory capabilities that IOSCO recommends to national regulators includes regulatory channels for reporting consumer complaints about misleading and illegal promotions and evidence-tracking processes to deal with the rapid and changing nature of online information.

Even more interesting is the potential legal obligation for crypto companies to have specific employee qualifications and licensing requirements for online marketing personnel, which IOSCO also suggests.

Another proposed measure is compliance with third country regulations – while providing its services to foreign clients, the company will have to determine if it can obtain a license to do so in the customer’s country.

The International Organization of Securities Commissions (IOSCO) has paid more attention to cryptocurrencies this year. In March 2022, I encouraged the organizers to Understand the implications Decentralized Financial Developments (DeFi) in relation to its powers. In July, in cooperation with the Bank for International Settlements (BIS), it published guidance for Regulating stablecoin arrangements.

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