The World Federation of Exchanges Chips Recommendations for Crypto Service Providers as Regulatory Concerns Grow
The World Federation of Exchanges, WFE has shared its suggestions for the digital asset sectors as user adoption and regulatory fears surges.
In a Sept 28 press release, the exchange body pointed out six recommendations for the sector and regulators to address user fears as some of their members adopt blockchain technology offering digital assets alongside their traditional counterparts.
The body explained that authorities should apply laid standards for the benefit of all stakeholders.
“By applying regulatory principles that have been proven via established, trusted market infrastructures, governments and regulators can aid the crypto-trading sector to grow whilst protecting investors and ensuring orderly, fair, and transparent markets.”
Top of the list is to segregate market infrastructure functions to limit crypto trading platforms (CTPs) from trading in conflict with their customers.
Secondly, authorities were urged to create systems that check wider risks to protect users, especially in price-determinant markets.
A typical example still fresh on the minds of digital asset users is the fall of algorithm-based stablecoin TerraUSD and the wider Terra ecosystem.
Other requirements include:
“Hold sufficient financial resources to meet expected operational stress events; Facilitate compliance with best execution requirements; Increase robustness of listing standards; Have appropriate governance and management requirements.”
It is worth noting that following the fall of FTX in November 2022, most centralized crypto exchanges have released periodic proof-of-reserves to show that user assets are backed 1:1 and can hold should a distress situation arise.
According to the body, crypto exchanges should not refer to themselves as
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