Crypto Products Suitability A Must In Regulatory
The International Organisation of Securities Commissions (IOSCO) issued global recommendations to jurisdictions on crypto and digital asset market regulation. IOSCO has asked for feedback on its recommendations via public consultation by July 31, 2023.
One of the key areas covered by IOSCO’s recommendations is’retail access, suitability, and distribution’ of crypto assets. IOSCO proposed that regulators require crypto-asset service providers (CASPs) to comply with its standards for interactions and dealings with retail clients.
This includes determining the suitability and/or appropriateness of specific crypto-asset products and services offered to each retail client. Regulators should consider imposing requirements related to suitability/appropriateness assessments when developing new frameworks for crypto and digital asset markets.
Client Suitability Assessment enables CASPs to profile potential clients in order to select the best investments based on their objectives, risk tolerance, preferences, experiences, specific needs, and circumstances, among other factors.
According to IOSCO recommendations, if CSAPs use suitability assessments, regulators should require that the assessments be robust enough not to give clients the impression that they fully understand the operations and risks associated with crypto asset markets.
(With inputs from Shikha Singh)
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