On August 20, 2018, four of the biggest cryptocurrency exchanges announced they had partnered to create a body that would help police the cryptocurrency market. The body that has been christened the Virtual Commodity Association will put in place best practices and regulations that will guide cryptocurrency industry players.
Cameron and Tyler Winklevoss – Founders of Gemini
Gemini, Bitstamp, Bittrex and BitFlyer have come together under the Virtual Commodity Association (VCA) in a bid to try and eliminate bad behavior in the billion dollar cryptocurrency industry. The association is the brainchild of Cameron and Tyler Winklevoss, the co-founders of Gemini. The VCA will e managed by an executive director and an independent board. Ms. Maria FIlipakis is the interim executive director. Ms .Maria is a former executive deputy superintendent at the New York Depart of Financial Services (FDS).
Once the VCA holds their first meeting sometime this September (date to be determined), they will deliberate on how they can establish the very first self-regulatory organization (SRO). The SRO will help oversee the crypto space in order to enhance security. The following are the proposed agenda items for the first meeting.
1. Establish the VCA membership guidelines
2. Establish a framework for best practices
3. Establish the framework for addressing arising conflicts of interests for members
4. Establish the best practices for client communications, disclosures and keeping of records
5. Appointing of the executive directors well as composition of the board of directors.
Word From the Member Exchanges
The CEOs of the big exchanges pioneering this association are enthusiastic that it will help to enhance security and safety in the crypto market. Nejc Kodrič, the Bitstamp CEO said,
“We’re proud to be a part of the Virtual Commodity Association as a way to add another element of protection for consumers.”
Yusuf Hussan, the Gemini CEO, lauded the move but observed that it was just but a first step in the right direction. He said,
“This is the first of many steps in policing the digital asset markets and answering the call of regulators.”
On his part, Hailley Lenon, Bitflyer’s Compliance Director, is convinced that this is such a huge development that every major player should be part of. He said,
“Industry leaders with extensive knowledge and who are impacted by regulations should really be part of the conversation,”
Roth John, the Bittrex Chief Compliance and Ethics officer observed that:
“By working with the VCA, we can advance our shared goals of improving transparency, accountability and security across all virtual currency trading platforms.”
The Need for Regulation
While there are many advantages to a market that is unregulated, but there is the danger of manipulation and abuse. An ideal market should have a self-regulatory mechanism to monitor every trade. As of now, the only semblance of regulation in the crypto market is the regulations each exchange puts in place to guide their users. For instance, Gemini partnered with NASDAQ and now uses their technology to detect any fraudulent activity on their platform. The adoption of the VCA will help standardize the regulation process and it will safeguard all stakeholders.