The Road to an Institutional Market in Cryptocurrencies
Cryptocurrency Regulatory Developments
As we see more institutions across the capital markets grapple with the place of cryptocurrencies adjacent to securities and derivatives, we need a better understanding of the regulatory framework in which cryptocurrencies will evolve. On the asset management and wealth side we see tremendous demand for services form traditional investment banks and broker/dealers to provide: custody, cyberrisk, institutional level trading, and a firm understanding of compliance and regulations. As more derivative and securities exchanges and players offer products and consider the level of adjacency between cryptoassets and securities and derivatives.
This further highlighted as New York State Attorney General Eric Schneiderman announced on 17 April that his office is launching inquiries into 13 different crypto exchanges. The AG is seeking “key information on their operations, use of bots, conflicts of interest, outages, and other key issues.”
Through our ongoing crypto research and client engagment we know how important it is to understand and frame cryptocurrencies within the security and derivative laws . We are constantly in discussions with clients as they consider what the future of blockchain and cryptocurrencies. In considering the technology implications, we quickly come up against what the legal and regulatory environment looks like. For exchanges, asset managers, clearing organizations, asset servicers, investment banks, and broker/dealers the regulatory and legal is a crucial component of their strategic thinking. To that end, I would like to highlight an extremely comprehensive report I just read, issued by a NY law firm today. The report Cryptocurrency Regulatory Developments really looks carefully at existing security and derivative laws and the evolution of cryptocurrency regulations both at an SEC and CFTC level, as well as pending legislation on a state by state level.