Securities Regulation Daily Wrap Up, BLOCKCHAIN—IOSCO finds ‘key gaps‘ in global crypto oversight, (Oct 21, 2025)
Regulators are struggling to get hold of rapidly growing crypto markets, which include 2 million tokens launched in 2024 and billions in trading volume linked to market fraud and abuse.
Key regulatory gaps remain in oversight of the nearly $4 trillion crypto markets around the world, including inadequate conflict of interest management systems, variability in disclosure requirements, and a lack of requirements for ongoing disclosures, according to an October 16 report by the International Organization of Securities Commissions (IOSCO).
IOSCO stressed that jurisdictions need to quickly implement recommendations for Crypto and Digital Asset (CDA) Markets.
“The Review is a call for action for jurisdictions to take steps to monitor the existing and emerging risks and seek to fully implement the CDA Policy Recommendations, as early as possible,” IOSCO stated in a press release announcing the report, Thematic Review Assessing the Implementation of IOSCO Recommendations for Crypto and Digital Asset Markets.
Given crypto’s international nature, the report called for closer international cooperation and information sharing.
“Enhanced international cooperation is essential to address regulatory arbitrage and ensure consistent and coherent oversight,” said Matthew Long, review co-chair and director of payments and digital assets at the UK Financial Conduct Authority.
IOSCO’s report was issued in parallel with a Financial Stability Board (FSB) report focused on financial stability issues connected to crypto assets.
Survey. Almost two-thirds (63 percent) of 20 selected jurisdictions are regulating crypto assets to some extent, with 8 of 20 jurisdictions reporting that they “fully regulate” crypto activities.
The surveyed jurisdictions included Abu Dhabi, AIFC Astana, Australia, Bahamas, Bermuda, Brazil, Canada, France, Georgia, Gibraltar, Hong Kong, Japan, Republic of Korea, Liechtenstein, Malta, South Africa, Singapore, Switzerland, Thailand, and the United Kingdom.
Fraud and market abuse. Illicit use of crypto assets is on the rise, from an estimated value of USD 11 billion in 2020 to an estimated USD 53.1 billion in 2024. Stablecoins have replaced bitcoin as the most common asset used in illicit activities.
Market manipulation is prevalent. In 2024, close to 4 percent of the more than two million tokens launched in 2024 were linked to pump-and-dump schemes, and wash trading may have accounted for up to USD 2.5 billion in trading volume.
Hacking and scams are also significant. For example, approximately USD 1.5 billion in crypto assets were stolen in a March 2025 hack of the ByBit exchange.
Twelve of twenty participating jurisdictions reported full implementation of fraud and market abuse measures. A key challenge is limited enforcement authority against unlicensed entities and individuals.
Governance and conflicts. Notably, crypto asset service providers (CASPs) typically engage in multiple functions and activities under “one roof.” A single legal entity may operate a trading venue and offer exchange services, brokerage, market-making and other proprietary trading, margin trading, custody, clearing, settlement, and services relating to lending and/or staking.
This combination of market roles raises potential conflicts of interest. For example, a service provider may both safeguard clients’ assets and engage in the staking validation process. The provider may prioritize its own interests in validator selection, reward distribution, or the handling of network penalties (e.g. slashing), which may not align with clients’ best interests.
Most participating jurisdictions require CASPs to disclose their roles, capacity, and any conflicts of interest, but specific disclosures vary. Ten jurisdictions have governance and organizational requirements already in effect, including systems and control measures such as anti-money laundering, operational resilience, and record-keeping.
Other findings. The report found similarly varying degrees of implementation of other recommendations, including:
Recommendation 11: Enhanced Regulatory Cooperation
Recommendations 12 to 16: Custody of Client Monies and Assets
Recommendation 18: Retail Client Appropriateness and Disclosure
RegulatoryActivity: Blockchain FinancialIntermediaries Enforcement ExchangesMarketRegulation FraudManipulation