The International Swaps and Derivatives Association (ISDA) called cryptocurrencies a unique asset class and announced the development of a regulatory framework for cryptocurrency derivatives.
“We recognize that digital currencies are a unique asset class, and appropriate terminology must be created to develop regulations,” said Scott O’Malia, CEO of ISDA.
In its report, the Association spoke about the risks that may affect the cryptocurrency derivatives market. ISDA is concerned about hard forks, soft forks, hacker attacks, free giveaways of cryptocurrencies, changes in legislation, unreliable providers of infrastructure solutions, and insufficiently strong links between cryptocurrency derivatives and underlying digital assets.
According to the authors of the report, the free distribution of cryptocurrencies gives the issuer the opportunity to benefit, which means that it has a direct impact on cryptocurrency derivatives. In addition, forks can create conditions for an increase or decrease in the price of the underlying cryptocurrency. This will have an impact on derivatives, the level of which will depend on the type of contract and the nature of the particular asset.
“The change in the underlying technology affects the cryptocurrency and its capabilities, including integration with other blockchains and digital assets, which will affect any derivative instrument based on it,” the report says.
Amid the launch of bitcoin futures ETFs and their success in the market, ISDA said the sector will need tight oversight in the very near future. The association urges lawmakers to develop cryptocurrency regulation as soon as possible, as legal uncertainty poses a threat to cryptocurrency derivatives.
Recall that in October, ProShares opened access to trading shares of a new ETF for Bitcoin futures. In one day, the volume of trading in the fund’s shares under the ticker BITO exceeded $ 1 billion.
