Industry body clarifies what happens when crypto derivatives crash

LONDON : An industry body set out a global framework on Thursday for trading derivatives linked to cryptoassets to avoid FTX-style collapses sowing confusion over ownership.

While most of the recent problems have occurred in the spot cryptocurrency market, many of the legal uncertainties could affect digital asset derivatives too. It will now include the body's first standard documentation for trading digital asset derivatives, initially covering non-deliverable forwards and options on Bitcoin and Ether.

The framework sets out the rights and obligations of both sides to a derivatives trade following market disruption, and ISDA also published discussion papers exploring legal questions raised by the bankruptcy of FTX.

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