Crypto Exchanges Including Gemini, bitFlyer Launch Regulatory-Fueled Working Group

As the saying goes, “if you build it, they will come.” Cryptocurrency exchanges from around the world are taking that approach with a new working group whose sequel could be a self-regulatory agency “to oversee virtual commodity marketplaces,” according to a press release.

The group, which is dubbed the Virtual Commodity Association (VCA), is comprised of Bitstamp, bitFlyer USA, Bittrex and Winklevoss-run Gemini exchange. Usually, these exchanges are competing for trading volume, but when it comes to an issue as important as regulation, they are able to come together for the greater good of the industry.

“We believe in the value of self-regulation, which we pursued in Europe almost from our inception, and look forward to following a similar path in the U.S. Those that can’t or won’t comply with regulations put consumers – and their own operations – at risk,” according to Bitstamp chief Nejc Kodrič in the press release.

Perhaps more notable than who is in the group is who is not, such as leading U.S. cryptocurrency exchange Coinbase, which seems to have an amicable relationship with regulators. Gemini, meanwhile, was shunned by U.S. regulators more than once in an attempt to deliver a bitcoin ETF to the market.

Institutional Invitation

The exchanges in the VCA are seemingly taking regulation into their own hands, perhaps in an attempt to appease sidelined institutional investors who are awaiting greater regulatory clarity to jump into the market. In addition to regulatory clarity, the market has been missing continuity in cryptocurrency market data, something that industry participants say could be on the agenda of the new working group.

“Institutions are genuinely skeptical today over the fairness and data quality in the crypto market. At CoinRoutes, even though we help our clients consolidate the data, there is a lot of concern over the quality of the exchange data we aggregate as well as underlying manipulation. An industry SRO is a great start towards ameliorating those concerns,” according to Dave Weisberger, CoinRoutes Founder and CEO, quoted in Business Insider.

Last year, Gemini, one of the exchanges in the group, inked a partnership with the CBOE for the futures exchange to use “Gemini’s bitcoin market data for bitcoin derivatives and indices.”

Meanwhile, stock exchanges have what’s known as the Consolidated Audit Trail, or CAT, which monitors orders and the broker-dealers facilitating them. VCA could develop something similar so that there’s greater transparency surrounding bitcoin and Tether prices, for instance.

Other areas of focus in addition to establishing industry guidelines could surround key issues like bolstering liquidity, eliminating fraud and keeping the lines of communication with regulatory officials open. Trading Technologies Product Marketing Manager suggested to Business Insider that the VCA could serve as a bridge between U.S. regulators and cryptocurrency traders.    

The working group’s first order of business is in September when the inaugural meeting will take place to address issues such as staffing and possibly naming an executive director.

Featured image courtesy of Shutterstock.

Author:
Gerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.

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