Regulators Should Approve Crypto-Related Products For Retail Investors: The WFE Responds To IOSCO’s Final Report On Investor Education On Crypto-Assets

The World Federation of Exchanges (“WFE”), the global industry group representing over 250 exchanges and CCPs which operate established, trusted and highly regulated trading venues, commends IOSCO’s Final Report on Investor Education on Crypto-Assets.

IOSCO is right – with crypto-assets, enhanced investor education is still necessary. 

Crypto-asset investments might lack basic investor protections, as those offering crypto-asset investments or services may not be complying with applicable law, including registration and licensing requirements," IOSCO notes in the report published this week. 

These things are fundamental, especially for retail customers. 

However, the benefits of crypto-related financial products, such as crypto-ETFs and crypto-derivatives, can be safely realised when traded on better regulated markets,  such as exchanges, due to the the higher level of investor protections that come with the more stringent oversight exchanges are subject to. 

Regulators should therefore approve crypto derivatives and ETPs for retail investors. By offering these products within regulated markets, exchanges help mitigate some of the key risks IOSCO has identified in its report. The necessary compliance with licensing, registration, and transparency requirements that govern trusted exchanges provides the safer option on which retail investors can trade these assets.

Nandini Sukumar, Chief Executive Officer of the WFE, said, “Broadening the pool of investible securities is always beneficial for investors as it provides more choice. The complexity lies in ensuring those investible securities are suitable to trade and operate within appropriate, and secure, parameters. Crypto-assets have been a case in point. Exchange-traded public markets, and products, place investor protection at the heart of their model. As an industry, we look forward to fulfilling our traditional role with crypto-assets too: offering markets & products that are open to all, while still operating in transparent ways with great integrity.” 

Richard Metcalfe, Head of Regulatory Affairs at the WFE commented, “By opening access to these products, regulators will broaden the horizons of retail investors within their jurisdictions by offering new capital allocation and risk management opportunities, traded within a trusted environment.”