Crypto markets have been facing a hard time with declining prices, increasing regulatory attention from the authorities and a rather much expected backlash narrative against the crypto upheaval. Amidst this potentially palpable situation that the crypto-world faces, a new Winklevoss twins-backed group is looking to lay the groundwork for a self-regulatory body, that would aim to clean up the industry and drive it out of a potential crisis.
The Virtual Commodities Association, first proposed by Cameron Winklevoss on March 2018 and officially launched this week on Monday, is an industry working group comprised of cryptocurrency exchanges and custodians. Cameron, the co-founder and President of the Gemeni Digital Asset Exchange announced on 20th August that it has finally formed a working group, with Gemeni, Bittrex, Bitstamp and bitFlyer as the first four members.
Cameron explained in a blog post, that the reason for using the term ‘virtual commodity’ is that the U.S. Cryptocurrency Futures Trading Commission (CTFC) views cryptocurrencies such as Bitcoin as commodities. He went on to say that due to unique qualities of cash markets for virtual commodities, it was important to add ”an additional layer of oversight” in the form of self regulation in order to protect consumers and to ensure integrity of these markets
We believe adding a layer of oversight on virtual commodity cash markets, in the form of self-regulation, is important for consumer protection and to ensure the integrity of these markets.
A self-regulatory organization is a non-governmental body that possesses a degree of regulatory authority over an industry, including establishment of best practices and ability to bring enforcement actions
The VCA’s press release says that Maria Filipakis, a former executive director at the New York Department of Financial Services who was instrumental in drafting virtual currency regulations known as the BitLicense, will serve as its first executive director.
She said in a statement:
I applaud the VCA and its members in their commitment to strengthen the digital asset industry’s regulatory landscape, rules for the protection of customers, and bring forth industry setting best practices and market transparency.
Member exchanges agreed unanimously that the group would better enable consumer protections and enhance relationships with the governmental regulators for the market. Cameron described the goals of VCA as:
- Foster financially sound, responsible and innovative virtual commodity markets through a system of industry sponsored standards, sound practices and oversight.
- Incentivize the detection and deterrence of manipulative and fraudulent acts and practices, including partnering with regulators like the CTFC to share information.
- Require member firms to commit in writing, upon joining VCA, to operating their virtual commodity markets in compliance with sound practices and provide a sanctions based accountability program to compel member compliance.
In advance of that, the group’s website stresses that it will function as an independent non-profit group, it will not operate any trading market and that it will not serve as a trade association. Also, it “will not provide regulatory programs for security tokens or security token platforms” and that it will help set adopt best practice standards.
There has been widespread appreciation for the Winklevoss’ initiative and the participants involved expressed how they looked forward to working together to ensure greater crypto market strength and security for all sectors of the United States.
Bitstamp’s CEO, Nejc Kodric, expressed his pride at being part of VCA.
We’re proud to be a part of the Virtual Commodity Association as a way to add another element of protection for consumers. 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.
As for Bittrex, it’s Chief Compliance and Ethics Officer, John Roth stated:
By working with the VCA, we can advance our shared goals of improving transparency, accountability and security across all virtual currency trading platforms.
Brian Quintenz, a commisioner with the Commodity Futures Trading Commission, has been vocal for an SRO for the crypto industry. He has also welcomed the VCA as:
Ultimately, an independent and empowered SRO-like entity could have a meaningful impact on the integrity and credibility of this young marketplace. Today’s announcement is a positive step towards that realization.
The exchanges will convene an inaugural working group meeting in September to hash out membership details, create a board of directors, establish guidelines for best practice promotion and other administrative components.