Despite the cryptocurrency industry expanding globally, the lack of clarity around regulatory issues has always hogged the limelight. A lack of set industry standards has been one of the major reasons for the struggle of cryptocurrencies to be adapted in the mainstream. Instead of waiting on for outsiders to define the rules of the game, industry leaders are proposing a self-regulatory organization (SRO) for the virtual currency world. (See also: Bitcoin Has a Regulation Problem.)
Self-Regulation for the Crypto Industry
Cameron and Tyler Winklevoss’ Gemini crypto exchange announced the formation of the Virtual Commodity Association (VCA) Working Group, which will also include three other leading crypto exchanges: bitFlyer USA, Bittrex and Bitstamp. The newly formed association will have an executive director and an independent board. Maria Filipakis, who has worked for the New York Department of Financial Services (DFS) as executive deputy superintendent and has experience in framing the department’s rules and regulations for digital assets, has been appointed as interim executive director.
The VCA will conduct the inaugural meeting of its Working Group during next month. The group will initiate the discussion with focus on establishing necessary guidelines for VCA membership, member staffing and initiating discussions for setting guidelines for best practices, rules-based marketplaces and other necessary areas of operations.
Global participants and entities, which are operating as virtual commodity platforms, over-the-counter trading firms and other trading facilitators, will qualify for VCA membership. Inclusion of the wide gamut of members with varied operations will ensure necessary collaboration and representation from all facets of the cryptocurrency industry at global level. (See also: Should Cryptocurrency Exchanges Self-Regulate?)
Winklevoss Brother Leads the Way
The proposal for formation of such a SRO for the U.S. virtual currency industry was pitched by Cameron Winklevoss in March. He explains the key idea behind the initiative is to “Foster financially sound, responsible, and innovative virtual commodity markets through a system of industry sponsored standards, sound practices, and oversight that promotes price discovery, efficiency, and transparency. Incentivize the detection and deterrence of manipulative and fraudulent acts and practices, including partnering with regulators and particularly the CFTC to share or refer information, as appropriate.”
Setting the necessary industry standards and regulations is expected to make large investors more comfortable with the cryptocurrency market, which still continues to operate in a nascent stage. A structured approach with well-defined rules and assurance of adherence by the various market entities through the VCA initiative can be a game changer for the crypto industry. (See also: More US States May Roll Out Cryptocurrency Regulations.)
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