[ad_1]
Hugh Jones
LONDON (Reuters) – An industry group on Thursday set a global framework for trading crypto-linked derivatives, avoiding a confusing FTX-style collapse on ownership.
The International Swaps and Derivatives Association (ISDA) has issued guidance on trading digital asset derivatives to clarify what happens in the event of a problem in the underlying market, such as the failure of cryptocurrency exchange FTX. bottom.
Most of the recent problems have occurred in the spot cryptocurrency market, but many of the legal uncertainties can also affect digital asset derivatives.
ISDA already oversees the “master agreements” or templates that banks use to trade trillions of dollars worth of derivatives worldwide.
This includes the institution’s first standard document for trading digital asset derivatives, initially covering Bitcoin and Ether undeliverable forwards and options.
According to ISDA, it may be expanded in the future to cover additional product types, including tokenized securities and other digital assets that run on distributed ledger technology (DLT).
The framework sets out the rights and obligations of both parties to derivatives trading after the market turmoil, and ISDA has also published a discussion paper examining the legal issues raised by FTX’s bankruptcy.
The collapse of FTX has resulted in the loss of billions of dollars in customer assets and raised questions about who owns the assets held by crypto exchanges or brokers.
Scott O’Malia, CEO of ISDA, said, “The recent failures in the cryptocurrency market emphasize the importance of having a clear and consistent contractual framework that spells out the rights and obligations of both parties after default. emphasized,” he said.
“All clients, whether individuals or institutions, need to know their assets are protected and understand their rights in the event of default,” said O’Malia.
(Reporting by Hugh Jones, Editing by Bernadette Baum)
[ad_2]
Source link
