LI: ISLA explores legal aspects of digital assets in securities lending

The International Securities Lending Association (ISLA) recently published a whitepaper highlighting the legal issues of digital assets used in securities lending.

When we reported that ISLA contracted lawyers Ashurst to work on the topic, crypto lender Celsius had recently entered into bankruptcy. Shortly before its bankruptcy, Celsius agreed to let stablecoin issuer Tether liquidate collateral against a loan it could not repay. But there are legal question marks over whether Tether had the right to the collateral. In legal lingo, did Tether ‘perfect its security interest’ in the collateral?

There’s potential for a legal minefield, and this is where ISLA wants to create at least some clarity. It gives the example of a GMSLA (governed by English law) entered into between a German lender and a French borrower for a digital bond issued by an Irish issuer and held at a Spanish custodian.

Read the full article from Ledger Insights

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