ISLA’s members have requested that we provide a response to the Consultation Paper [of 28 July 2022]. Since ISLA’s primary focus is on the securities lending and associated financing markets, our members’ interests in the Consultation Paper are to those aspects which are relevant for those markets. We are conscious that there are various aspects of the Consultation Paper which are not directly relevant to those markets, and we therefore do not express any views on those aspects of the Consultation Paper.
ISLA recognises the significant benefits of the FCARs insofar as they relate to traditional financial collateral. We consider that those benefits should extend to digital assets (to the extent that they do not already do so). ISLA therefore supports the Law Commission’s proposal to implement law reform to establish a legal framework that better facilitates the entering into, operation, rapid priority enforcement and/or resolution of crypto-token collateral arrangements. Whether to do so by extending the FCARs or by adopting a separate, similar collateral regime in relation to digital assets will require additional, detailed analysis.
The full ISLA response is available at https://www.islaemea.org/wp-content/uploads/2020/04/ISLA_Response_to_Law_Commission_Consultation_on_Digital_Assets_November2022.pdf