Introduction
This brief enumerates the legal, regulatory, and supervisory gaps within the crypto ecosystem and examines what is needed to close these gaps. These include actions needed for consumer and investor protection, market integrity, financial stability, and financial crime prevention. Appropriate governance is also critically important; so much so that this topic will be the subject of a separate brief.
In this brief, after reviewing recent developments in crypto-asset markets, we propose some general principles to guide regulation and supervision of these activities globally. We conclude by identifying the key gaps in existing laws, regulations, and supervision.
Examining how the issues and risks associated with crypto differ from those in traditional financial instruments is critical in developing mitigants and solutions that are fit for purpose. While legal and regulatory clarity is needed, filling the gaps also requires care in crafting laws and regulations that address the novel risks in these new activities.
