Game changer for Crypto

In a grand effort to promote self-regulation in the cryptocurrency trading markets, four of the largest digital exchanges have come together to show a united front in the world of digital currency – a step that experts believe could be a significant game-changer for the 214B$ industry.

Leading the way is Gemini and the Winklevoss twins, followed by Bitstamp, Bitflyer USA and Bittrex. Together they have created the Virtual Commodity Association Working Group (VCA) which could lead to the formation of a self-regulatory organisation for digital assets such as Bitcoin and Ethereum.

This new working group has expressed their interestin developing and implementing new industry standards, increasing transparency, and collaborating with global and domestic regulators (including the US) to work against and prevent fraud and external manipulations in the market.

At a time when regulators are trying desperately to walk the hairline tightrope between comprehensive and protective regulation and encouraging innovation and development, the creation of this groups brings a lot of hope and ambition for the better growth of the cryptocurrency trading sphere. This independent group can find new ways to solve the opacity of the crypto markets, develop best practice guidelines for the industry in general, and find ways to boost liquidity.  The formation of such an organizsation will help to bring individuals, regulators and lawmakers to the same point, and engage with each other over how regulation should work in such a new industry.

Earlier this year Gemini hired Nasdaq Inc. to conduct surveillance on the crypto market, in order to begin stepping up enforcement. The group has already named the interim executive director, Maria Filipakos, formerly of the New York Department of Financial Services. The four representatives of the VCA working group will convene in September for the first time to discuss the setup of the organisation. The agenda is expected to include the guidelines and requirements for VCA membership, guiding principles for best practices, and frameworks for addressing conflicts of interest, client communications, and client disclosure. All of these things stem from a desire to ensure transparency, appropriate riskmanagement protocols, openness and liquidity.

While membership will be open to a broad range of digital asset organisations, including commodity platforms, OTC trading firms, and counterparty firms, it appears that there will be some strict requirements to which members will need to adhere in the realms of security, protection, information sharing and transparency.

This combined effort to ensure fair play in the markets can be seen as a significant step in the direction of adequately monitored and policed Bitcoin markets. However, there are some reservations regarding the formation of this new group. Coinbase, the largest crypto exchange in the US, did not join the team.

If all goes as planned, and this group does create a Self-Regulatory Organisation (SRO) that holds its members to an exceptional standard, it could mean an increase in opportunities throughout the cryptocurrency market, which until now has suffered from instability, rumours of illegality and fraud, and high-risk trading on the markets.