The International Swaps and Derivatives Association (ISDA) is developing two papers to address legal risks in the crypto market, such as the insolvency of crypto exchange firms.
The papers will offer guidance for market participants on crypto ownership and the role of intermediates in the event of bankruptcy.
The initiative was prompted by the collapse of crypto exchange FTX and previous bankruptcy cases that have raised concerns about liquidity and solvency across the crypto ecosystem.
The papers will also address issues related to customers’ digital assets held with intermediaries and how they may be treated in an insolvency scenario, and provide standards on close-out netting and collateral.
The ISDA is a private trade association primarily made up of banks that transact in the over-the-counter derivatives market and aims to identify and reduce risks in the market.
