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Virtual asset trading platforms: An assessment of the stability risks and the potential for self-regulation

Author

Listed:
  • Copeland, Rory

    (Solicitor in the Financial Regulation team, Pinsent Masons Pinsent Masons LLP, 30 Crown Place, London, EC2A 4ES, UK)

Abstract

In response to recent reports by influential financial regulatory bodies, this paper aims, firstly, to outline the financial, operational and systemic risks affecting the stability of virtual asset trading platforms (VATPs). It highlights risk management techniques that can be used to mitigate them. Some of these risks are applicable to trading platforms in general, and some are unique to Blockchain technology. Second, it makes the case for international self-regulation by VATPs and outlines the measures that platforms can adopt in order to build market stability and enhance client security. It argues that self-regulation can align platform and client interests, reduce systemic risk in the virtual assets market and act as a viable alternative to regulation from national or international bodies.

Suggested Citation

  • Copeland, Rory, 2019. "Virtual asset trading platforms: An assessment of the stability risks and the potential for self-regulation," Journal of Digital Banking, Henry Stewart Publications, vol. 4(3), pages 268-279, December.
    • Handle: RePEc:aza:jdb000:y:2019:v:4:i:3:p:268-279
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    More about this item

    Keywords

    cryptocurrency; Blockchain; financial stability; risk management; self-regulation;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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