Several of the world’s largest cryptocurrency exchanges, including Bitstamp and Bittrex, has joined a Winlkevoss brothers’ initiative to create a self-regulatory organization in an effort to prevent fraud and manipulation in digital assets markets.
The Virtual Commodity Association was proposed by Gemini Trust co-founders Cameron and Tyler Winklevoss in March 2018. The non-profit group, as it was claimed at that time, would aim to develop industry standards, promote transparency and work with regulators including the U.S. Commodity Futures Trading Commission (CTFC) to prevent fraud.
On Monday, August 20, VCA expanded its roster of participants to include Bitstamp, BitFlyer USA and Bittrex. According to a statement, representatives for the four exchanges will meet for the first time in September to discuss setting up the self-regulatory organization.
Yusuf Hussain, Gemini Trust Company LLC’s Head of Risk, said:
“This is the first of many steps in policing the digital asset markets and answering the call of regulators.”
The CFTC, U.S. Securities and Exchange Commission (SEC) and other regulators heavily rely on self-regulatory organizations to monitor trading in everything from obscure swaps to shares in the biggest U.S. companies. Currently, no federal regulator has direct authority over the cadre of exchanges that trade cryptocurrencies in the spot market. Instead, there’s a patchwork of state laws serving as the legal framework that critics say invites abuse and potential manipulation.
“We’re proud to be a part of the Virtual Commodity Association as a way to add another element of protection for consumers,” said Nejc Kodrič, Bitstamp CEO. “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.”
Brian Quintenz, a CFTC commissioner, sees today’s announcement as a “positive step” for the crypto industry.
“Given the absence of federal oversight jurisdiction in the crypto market, in February and again in March of this year I called on the crypto platform community to come together and develop a self-regulatory organization-like entity that could develop and enforce rules,” he said in a statement. “Today’s announcement is a positive step towards that realization.”
The VCA will have an executive director, independent board, and establish a framework for industry best practices. The VCA interim Executive Director will be Maria Filipakis, former Executive Deputy Superintendent at the New York Department of Financial Services (DFS) who was instrumental in drafting the DFS rules and regulations for virtual currency.
Back in March the Winklevoss twins said that a thoughtful SRO framework that provides a virtual commodity regulatory program for the virtual commodity industry would be the next logical step in the maturation of this market
“The promise of virtual commodities and their impact on the future will be profound – but individuals and institutions need to feel safe and secure when transacting,” they said.
As reported by ForkLog, when the SEC recently rejected for the second time the Winklevoss brothers’ request regarding the launch of a Bitcoin ETF , it cited concerns Bitcoin markets aren’t adequately policed for manipulation.
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