Self-Regulation of Crypto Gets One Step Closer

Bitstamp Coinbase Exchange Gemini USA

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Fredrik Vold

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Fredrik Vold

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June 26, 2023

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Four US-based crypto exchanges have announced that they are setting up the precursor to what they hope will become a self-regulatory organization for “virtual commodities.”

The aim of the group, dubbed “Virtual Commodity Association Working Group,” is reportedly to help financial institutions and large investors take the leap into the crypto space, establish industry standards, and eventually form a “self-regulatory organization for digital commodities like bitcoin and ethereum,” Business Insider wrote.

According to a source quoted by the website, the newly formed organization aims to operate in ways similar to self-regulatory organizations in the world of traditional finance, by working on things like establishing “best practices for the industry, looking at ways to boost liquidity, and stamping out market manipulation.”

The four US-based exchanges behind the new working group is bitFlyer, Gemini, Bitstamp, and Bittrex. Coinbase, however, is reportedly not part of the new group and declined to comment on it, Business Insider noted.

Tyler and Cameron Winklevoss, the twins crypto investors behind the Gemini Exchange, have been working on setting up such an organization since March, when they first filed a proposal to set up a new organization under the name Virtual Commodity Association.

Since the beginning of this year, crypto-exchanges have begun banding together with the aim of not only forming industry-wide associations, but also of drawing up codes of conduct for each other to follow, as reported by Cryptonews.com.

However, while it’s only a good thing that they’ve begun openly committing to upholding more robust standards, it’s clear that much of this commitment is being made as a result of threats of stricter government regulation. As such, it’s not entirely certain whether the associations now being formed will be more about actual regulation and enforcement, or more about public relations and government lobbying.

For example, in South Korea exchanges promised they would stop adding new tokens and would start adhering to the government’s real-name trading guidelines. But they didn’t stick to those, in most cases.