ISDA announces market rules for cryptocurrencies

Wed 15 Dec 2021 ▪ 20h27 ▪ 3 min read — by Hugh Renolds

The International Swaps and Derivatives Association (ISDA) General Agreements have long been widely used as the legal basis for the majority of significant transactions involving financial derivatives such as bonds, stocks, or currencies around the world. It is their instructions that market participants adhere to when they need to adjust the terms of their contracts.

At the same time, the members of this association are always hard at work as the world market is developing and new assets come about. Naturally, cryptocurrencies could not bypass ISDA. Like many other assets, cryptos have a number of features inherent exclusively to them, which indicates the need for specific sets of rules designed to conduct transactions using digital assets.

ISDA announces a Code of Practice for cryptocurrencies

Recently, ISDA has announced that it has begun devising such a set of rules, thereby recognising the uniqueness of cryptocurrencies. As a result, the world will see new common legal standards and templates for derivatives related to digital assets. These will be designed primarily to tackle various blockchain failures such as cyber-attacks. Besides, the code will entail positive regulation of forks and airdrops, which usually flood the market with new tokens.

The growing interest in cryptos on commodity exchanges 

According to Scott O’Malia, CEO of ISDA, digital derivatives standards will be consistent with the spot market, although they’ll be defined as a separate product class. He also noted that a set of rules for the crypto market is needed to boost the confidence in cryptocurrencies on the part of institutional investors.

The step followed the spike in activity in the digital asset market since bitcoin futures, as well as some other cryptocurrency products, are drawing more and more investors to them. Last month, the average Bitcoin trading volume on the Chicago Mercantile Exchange was about $4.3 billion, with the derivatives market accounting for more than half of that amount.

The need for a set of rules for the crypto market is also driven by the interest in crypto on the regulators’ side. Hopefully, the new code will only bring positive change and higher levels of security for all crypto investors.

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Hugh Renolds avatar
Hugh Renolds

I believe in the bright future of crypto. I have been investing since 2017 and look to share my experience in, and thoughts on, crypto and the blockchain.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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