Trading in crypto shares that currently don’t meet securities trading requirements cannot readily occur on regulated markets (exchanges). Trading can therefore only take place over-the-counter (OTC), e.g., via bulletin boards. Trading on unregulated markets involves higher risks as these are often less transparent, have less stringent security standards, and offer less investor protection.

  • OTC Trading: OTC trading enables direct trading between buyers and sellers without exchange involvement. This offers flexibility but also involves higher risks as transactions aren’t subject to the same security standards, transparency requirements, and investor protection as trading on regulated markets.

  • Crypto Trading Venues: Specialized crypto exchanges provide a platform for trading crypto assets, but not crypto securities. These exchanges often face less stringent regulatory requirements than traditional exchanges, offering both opportunities and risks for investors, but no future possibility for crypto securities.

  • Legal and Regulatory Specificities: Trading on unregulated markets is subject to less stringent regulations than trading on regulated markets. This can lead to higher volatility and increased risk of market manipulation. Additionally, legal certainty for transactions on unregulated markets is often lower.

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Potential:

Despite the risks, unregulated markets also offer advantages:

  • Flexibility: Trading is less bound by rigid rules and processes.

  • Easy Access: Access to unregulated markets is often easier than access to regulated markets.

  • Innovation: Unregulated markets provide space for innovations and development of new trading models.

Regulated MarketsDLT Pilot Regime