Technological innovation can enhance financial markets, and we see distributed ledger technology (DLT) as something which can aid these goals. DLT has the potential to deliver lower costs, faster execution of transactions, improved transparency, auditability of operations, and other benefits. Our members have been at the forefront of technological change for a long time and are interested to see whether DLT can help to improve their services and offerings to customers and the broader market.

Over the last year, adoption of digital assets has continued to advance. Developments have included the growth of available products globally, large inflows into crypto-exchange traded products (ETPs), increasing investor interest and a heightened focus on crypto-asset trading platforms. There have been a number of notable incidents, with the biggest of them being the demise of FTX, among other hacking, anti-money laundering (AML), and control breach related incidents. Regulatory focus, at this point, has turned with full speed to the core activity of such platforms: trading.

Such increased scrutiny is a key area of interest for exchanges, market participants and regulatory authorities, particularly those with authority over secondary markets in general and those who may soon have broader authority over Crypto-Asset Trading Platforms (CTPs). With the aim of providing a resource for its membership and the wider public, this WFE paper addresses topics of particular concern to the transparency, fairness, and security of CTPs, and highlights key policies and practices for such platforms. Exchanges and the WFE have a valuable perspective on this as operators of markets through the full value chain from trading, clearing and settlement services, and as pioneers in the adoption of technological innovations in financial markets.

Finally, the crypto-asset industry is rapidly evolving. Trading platforms are constantly refining and changing their operations and may decide to adopt new policies based on market conditions, regulatory requirements, or the findings of government agencies. Our comments here should not be taken as reflecting on the many legitimate and innovative businesses involved in the development and promotion of the technology at hand. Nevertheless, we think we can offer a valuable perspective on the way CTPs should be organised based on our members’ experiences running regulated exchanges. Since the publication of this paper, certain platforms might have revised or improved various policies of interest. The information in this paper is current as of September 2023.