The Final Report highlights examples of regulatory changes and enforcement activity by C8 members since the related 2020 report, as well as current priority  issues around investor education in the cryptoasset space, such as relationship investment scams and the need to communicate with retail investors on, and about, social media. 

The report provides a global point-in-time view on the evolving retail trading environment, and outlines a suite of measures for regulators to consider involving:

• supervisory and enforcement issues emerging from cross-border offerings, and the need to enhance cooperation frameworks
• conduct and fraud implications emerging from recent cryptoasset trading trends
• increased greenwashing risk and the need to better identify compliance with climate disclosure standards
• impact of social media and finfluencer activity on retail decisions and behaviour, and the need to heighten regulators’ digital presence and strategies
• the escalation in unlicensed activity and the surge in self-directed online trading.

This analysis will inform ASIC’s strategic priorities on retail investor harms concerning cryptoassets, sustainable finance, scams and Australia’s design and distribution obligation laws.

In its press release, IOSCO said: 

"Digitalisation and social media are changing the way financial services and products are marketed and distributed to retail investors, providing greater opportunities for firms to reach a broader investor base and for retail investors to access a wider range of products. Digitalisation and social media also present risks associated with the use of behavioural and gamification techniques and financial influencers that impact retail investor trading behaviour.

"Developments in digital offerings, including use of new complex products such as cryptoassets, give rise to novel regulatory and investor protection challenges, spanning the whole distribution chain. As digitalisation trends evolve faster than regulatory frameworks, there is a risk that retail investors could be exposed to harmful or even fraudulent online activity."

The report looks at global developments in online marketing and distribution of financial products to retail investors and discusses enforcement challenges encountered by regulators. It sets out examples of how some member jurisdictions have addressed these issues. 

The report presents four areas of guidance, covering the following activities:

• Developing educational content about cryptoassets.
• Informing the public about unlicensed or fraudulent firms.
• Using a variety of communication channels to inform investors.
• Forging partnerships to develop and disseminate educational materials.

IOSCO said that its members have expressed concern in recent years about the use of cryptoassets in areas from trading, custody, clearing and settlement, accounting, valuation, intermediation and investment funds.

In a statement, IOSCO acknowledged that stablecoins can potentially offer benefits to market participants, consumers and investors.

However, stablecoins also give rise to potential risks, in areas such as consumer protection, market integrity, transparency, conflicts of interest and financial crime, as well as potential systemic risks.

IOSCO, which is made of 34 national securities regulators and regulates over 95% of the world's securities markets in more than 115 jurisdictions, had asked its FinTech Network to assess how its principles and standards could apply to global stablecoin initiatives.

This assessment concluded that a case-by-case approach is needed to establish which principles and standards, as well as national regulatory regimes, would apply.

"A detailed understanding of how the particular proposed stablecoin is expected to operate is therefore needed, including the rights and obligations it confers on participants and the continuing obligations of the sponsor," IOSCO said in its statement.

The Chair of the IOSCO Board, Ashley Alder also said that the analysis shows that stablecoins can include features typical of regulated securities.

"This means IOSCO Principles and Standards may apply to stablecoins depending on how they are structured, including those related to disclosure, registration, reporting and liability for sponsors and distributors… We encourage international collaboration, so the risks relating to stablecoins can be identified and mitigated, and the potential benefits realised, he said.

IOSCO issued a notice cautioning investors against the "clear risks" associated with ICOs.

Echoing numerous similar warnings from global regulators, the organisation has warned that ICOs are "highly speculative investments" in which investors are putting their entire capital at risk.

ICOs are not standardised and their legal and regulatory status is also likely to depend on individual circumstances.

"The increased targeting of ICOs to retail investors through online distribution channels by parties often located outside an investor’s home jurisdiction - which may not be subject to regulation or may be operating illegally in violation of existing laws - raises investor protection concerns," the notice said.

IOSCO therefore warned investors to be "very careful" when contemplating investing in ICOs.

This warning by IOSCO complements a growing list of similar warnings by financial regulators worldwide.

By IOSCO's own count, 27 global regulators have so far have issued notes of caution on ICOs.