A new report from Acuiti suggests that the US is trailing the EU when it comes to the regulatory frameworks around the issuance and trading of cryptoassets.
Acuiti’s Crypto Derivatives Management Insight Report, which consulted more than 200 senior executives at firms engaged in institutional crypto derivates trading, singled out the United Arab Emirates (UAE) (39%) and the European Union (EU) (35%) as jurisdictions developing the most optimal regulation for the trading of cryptoassets.
The EU’s Markets in Cryptoassets Regulation (MiCA) will come into effect on 30 June 2024 while the UAE has been busy establishing a new regulator, the Virtual Assets Regulatory Authority, which has issued regulations governing the issuance, trading and custody of digital assets.
But when it comes to algorithmic stablecoins, which the EU has banned under MiCA, only around a third of respondents agreed with this decision. No respondents agreed with MiCA’s limitation on trading volumes per day in non-Euro denominated stablecoins.
No respondents stated that the US was developing the most optimal regulation for the trading of cryptoassets and over half (56%) believed that the cryptoassets in the US should come under a new regulator.
Given that jurisdictions are at different stages when it comes to regulation, it may come as no surprise that an overwhelming majority (80%) of those consulted in the report said that regulators should align their frameworks as closely as possible.
When it comes to the issuance of cryptoassets, it was almost universal that respondents felt that issuing companies should have to comply with a minimum standard of information regarding the asset, be appropriately liable for misleading statements, and that controls and procedures to prevent fraud should be in place.
Similarly, 91% of those consulted said intermediaries in cryptoasset trading, such as brokers, should be subject to the same or similar regulatory standards as they are in regard to traditional assets.
A significant majority (92%) also thought venues should bear the main responsibility for monitoring and reporting market abuse while 83% said that they should have the same responsibility for trade and transaction reporting.
When it comes to what liabilities a custodian of cryptoassets should have for assets lost in hacks, MiCA states that custodians will have uncapped liabilities. This was supported by 71% of respondents.
The development of crypto derivatives on listed markets has so far focused on products that reference big names such as Bitcoin and Ethereum, but the market is maturing, and demand is growing for new launches.
However, there was no absolute majority when it came to selecting which cryptoasset respondents would most like to see new derivatives launched on, with Tether (38%), Polkadot (33%) and Avalanche (29%) making the top three choices.
While market sentiment dropped from 75% in Q1 to 62% this quarter, reflecting the US Securities and Exchange Commission coming down hard on Coinbase and Binance, sentiment was buoyed by low volatility and declines in the price of several key coins.Â
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