With regulation constantly on the lips of anyone who has something to do with cryptocurrency, a group of crypto exchanges have decided to band together to form a self-regulating organization called the Virtual Commodity Association (VCA), with the backing of the Winklevoss brothers’ Gemini exchange.
Tyler and Cameron Winklevoss, founders of Gemini exchange, were consistently in the news of late, what with their failed application for a crypto exchange traded fund (ETF) as well as pronouncements that BTC will once again reach its all-time highs registered last December. This time, Gemini has launched a working group to commence the drafting of industry standards to prevent fraudulent activities like market manipulation. Members of the VCA’s working group include bitFlyer, Bitstamp, and Bittrex.
The move comes against a backdrop of continuous investigations and scams with South Korea also completing a detailed investigation into the country’s cryptocurrency exchanges—most of which were found wanting in investor protection as well as security.
The VCA, however, is not a new idea. It was actually first proposed in March with a goal of fostering “financially sound, responsible and innovative virtual commodity markets.”
On its website, VCA noted that the U.S. Commodity Futures Trading Commission (CFTC) has legal jurisdiction over commodities, including cryptocurrencies, although the commission does not necessarily have jurisdiction over cash and spot markets derived from commodities.
However, the CFTC is empowered by the Commodity Exchange Act (CEA) to regulate fraud or market manipulation. Interestingly, the so-called self-regulatory organization is actually looking at providing additional layers of oversight as can be read in the post:
“The purchase and sale of commodities in the spot/cash markets has been historically exempt from the CEA and CFTC jurisdiction. Nevertheless, cash markets for virtual commodities—as it is a less well-known industry—can benefit from an additional layer of oversight. We believe that adding this layer can provide even more protection for consumers and ensure the integrity of these markets and growing industry.”
The VCA plans to appoint a board of directors who will oversee the organization, which promises to remain a non-profit, independent group that can “help set and adopt global standards and best practices.”