Major players in the crypto space are uniting to form a new self-regulatory body to improve standards. The Virtual Commodity Association Working Group is planning its first meeting in September 2018. Five cryptocurrency exchanges will join as initial participants: Bitstamp, Inc., bitFlyer USA, Inc., Bittrex, Inc., and Gemini Trust Company, LLC.
The Working Group plans to form an industry-sponsored, self-regulatory organization (SRO) that oversees virtual commodity marketplaces. The group has appointed Maria Filipakis as its interim executive director. Filipakis, former Executive Deputy Superintendent at the New York Department of Financial Services (DFS), was instrumental in drafting the DFS rules and regulations for virtual currency.
The VCA intends to address the regulatory challenges that dealt recent blows to the crypto sector. The U.S. Securities and Exchange Commission (SEC), citing multiple concerns over consumer protections, denied the second Bitcoin ETF proposed by the Winklevoss twins, who own and operate trading platform Gemini.
The SEC also delayed its decision on the VanEck SolidX Bitcoin Trust, citing the need for more time to make an informed decision.
At the initial meeting, VCA participants will establish the following:
- Guidelines for membership in the VCA.
- Guidelines for best practices and rules-based marketplaces that will promote fairness, transparency, risk management, and liquidity.
- Guidelines for best practices that will address Member conflicts of interest, client communications, client disclosures, and record keeping.
- Staffing the VCA, to include an Executive Director, among others, and composition of the Board of Directors.
Gemini’s Head of Risk Yusuf Hussain says, “This is the first of many steps in policing the digital asset markets and answering the call of regulators.”
“The blockchain industry must focus on protecting its customers and operating in a responsible manner to significantly increase adoption globally,” said John Roth, Chief Compliance and Ethics Officer at Bittrex. “By working with the VCA, we can advance our shared goals of improving transparency, accountability and security across all virtual currency trading platforms. This effort will also complement our discussions with regulators and legislators about developing a long-term solution that creates a fully-compliant environment for blockchain while encouraging innovation, economic growth, and US leadership in the industry.”
The self-regulatory body is a sign of growing rigor, discipline and maturity in the cryptocurrency space which has seen its share of tribalism and factionalism. The Wild West phase, which spurred a burst of innovation and enthusiasm, is rapidly morphing. Key players are consolidating and retooling their mission statements to form a broad base of support by coming together.