Trade Surveillance Framework for Crypto Assets

This whitepaper presents a comprehensive examination of trade surveillance specifically tailored for crypto assets. It begins by outlining the foundations of crypto assets, highlighting the distinction between direct and indirect exposure methods for investors. The document emphasizes the regulatory landscape, detailing the Market Abuse Regulation (MAR) and the Markets in Crypto-Assets Regulation (MiCAR), which impose requirements on firms dealing with crypto-linked financial instruments. The paper further discusses the challenges faced in trade surveillance due to the unique characteristics of crypto asset trading, such as the pseudonymous nature of transactions and the volatility of the market. It categorizes market participants into established firms and new entrants, explaining the differing surveillance needs and infrastructure requirements for each. Established market participants must adapt their existing surveillance systems, while new entrants are tasked with developing their surveillance setups from the ground up. The document concludes with a focus on the importance of tailored risk assessments and the integration of essential data for effective monitoring.