The Gibraltar government said it plans to establish the world’s first rules for liquidation and resolution of crypto derivatives, and create a regulatory framework to improve market integrity and reduce key risks.

In collaboration with the Gibraltar Financial Services Commisede (GFSC) and Crypto Exchange Bullish (the parent company of Coindesk), the government has over the past six months built a framework to coordinate traditional financial clearing regulations in the virtual asset market.

According to Bullish, the framework allows virtual asset derivative contracts to be cleared and resolved by a recognized clearing house.

Clearinghouse ensures that the transaction is completed as the buyer and seller meet their commitments. Many virtual asset exchanges perform their functions and without regulatory oversight could lead to failure in the process, bull said.

The proposed administration said it would allow for the establishment of separate clearing houses with “improvement of transparency and capitalization.”

Read more: UK’s first FCA-regulated Crypto derivative trading venue GFO-X debut