Crypto-assets: regulatory considerations

AMAFI provided feedback in August (AMAFI / 19-81) to the consultation by the International Organization of Securities Commissions (IOSCO) on crypto-asset trading platforms (CTPs).

As ecosystems develop around distributed ledger technologies, crypto-assets and their associated activities are drawing increasing attention from regulators. In its report titled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms (CTPs), IOSCO details the main challenges, which include access to CTPs, safeguarding participant assets, conflicts of interest, CTP operations, market integrity, price discovery and technology. The report also considers how IOSCO’s principles and methodology can apply to these activities and provide authorities with guidance on the challenges and risks associated with the rise of such ecosystems.

In its contribution, AMAFI said that CTPs present many of the same regulatory challenges as conventional trading venues. However, given the innovative characteristics of the blockchain technologies used to transfer crypto-assets, and the nature of the assets themselves, CTP activities are so unique that some of the obligations for standard platforms do not apply. Future regulatory frameworks must take these differences into account. However, since the challenge is to enable innovative projects to flourish while ensuring that investors and end users are properly protected, prior research needs to be done on activities that are still at an early stage of development. Greater CTP maturity, larger trading volumes and constructive dialogue between traditional firms and those already operating on the crypto-asset market will be crucial in building appropriate regulatory frameworks.