America’s CFTC has been looking at regulation and the adoption of Digital Assets.Significant as the International Settlement Derivatives Association (ISDA) has just published its Common Directive in an attempt to try and initiate an industry standard conventions on how derivatives are traded and processed.
The current system is manual intensive and the industry faces increasing regulatory costs. ISDA is looking for ways to introduce greater automation in the industry.
The derivatives market is said to be worth as much as ten times the world GDP, being valued at over $1.2 Quadrillion and was considered to be responsible for the onset of the 2008 financial crisis. If ISDA is successful with its Common Directive, it could make Smart Contracts much easier implement leading to much greater use of Blockchain technology in the derivatives market.
Regulators should welcome the greater transparency and traceability that this could bring. Paradoxically there are concerns that public Blockchains could enable “bad actors” to manipulate or falsify transactions when this is feasible only in DLP / permissioned chains.
CFTC in the USA, like a number of other regulators elsewhere , is trading a fine line as it offers guidance as to how to embrace Blockchain technology and Digital assets. If they are too draconian countries more receptive to the use of Blockchain technology will have a competitive advantage resulting in a loss of financial services revenue to laggards.
