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CFA Institute Demands Strong Framework For Crypto

The CFA Institute says cryptoassets demand a strong and clearly defined regulatory framework to protect investors. Without this, crypto will be unable to gain mainstream acceptance, says ‘Cryptoassets: Beyond the Hype: An Investment Management Perspective on the Development of Digital Finance.’ It identifies three issues that the market will need to clarify before cryptoassets can progress from the perspective of investors: valuation, fiduciary duty, and the custody of assets. Olivier Fines, head, EMEA Advocacy, at the CFA Institute, says, "Crypto platforms combine many of the functions that in mainstream finance are kept separate, such as the roles of brokerages, exchanges, market makers, custodians, and clearing agencies. Existing regulations that intend to prevent traditional finance firms from using customers' assets to fund their own or affiliated businesses may not always provide similar protections for investors in crypto." It recommends policymakers agree on definitions and supervisory programs that take into account the specific nature of cryptoasset services and determine if cryptoassets are securities, other forms of financial instruments, commodities, or currencies and harmonize this definition at the international level. As well, regulators should not adjudicate which technological developments or orientations offer markets, investors, and consumers the most benefit. Nor should policymakers compromise investor and consumer protections because a technology is new.

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