Coinbase, Circle, Anchorage Digital, and Huobi Global are among a group of leading cryptocurrency companies creating a new alliance aimed at combating market abuse and instilling trust in the nascent digital asset business.
The risk-monitoring software firm Solidus Labs has convened the alliance, which has been named the Crypto Market Integrity Coalition. This alliance is also calling on cryptocurrency firms to agree to and sign up for a “market integrity” undertaking that accepts the possibility of fraud in the cryptocurrency industry and the urgent need for the industry itself to safeguard the interest of investors.
“It really is about recognizing that you need entities that are focused on a fair and orderly system here, and really trying to prevent the abuses that can happen if you’re not paying attention,” said Kathy Kraninger, vice president of regulatory affairs at Solidus Labs and former director of the Consumer Financial Protection Bureau.
Despite its popularity, authorities are worried about the safety of investors in the new market, prompting the formation of the new alliance and the pledge to prevent market manipulation. The Securities and Exchange Commission of the United States has rejected multiple applications for spot bitcoin exchange-traded funds, citing the risk of market manipulation as one of the main reasons.
The markets regulator recently banned a request by Fidelity’s Wise Origin Bitcoin Trust to provide an ETF that would track the cryptocurrency, claiming that it did not fulfil the rules required to stop fraudulent and manipulative actions. The Bank for International Settlements (BIS) urged for greater regulatory measures to prevent crypto fraud in December, claiming that DeFi is vulnerable to criminal activity and market manipulation due to the insufficient application of anti-money laundering standards and transaction anonymity.
even though this latest pledge is a significant admission of the risk of fraud in the crypto realm, it is still unclear how the decentralized finance industry can combat unscrupulous actors.
CrossTower, BitMex, GSR, Bitstamp, Elwood, CryptoCompare, Security, MV Index Solutions, the Chamber of Digital Commerce, Global Digital Finance, and CryptoUK are among the coalition’s other founding members.
As many market participants wait for greater regulatory certainty, the partnership could help “harmonize financial integrity norms,” said Dante Disparte, Circle’s chief strategy officer and head of worldwide policy.
“Integrity is paramount to the progress and ability of our industry to continue innovating and building an infrastructure that delivers on the promise of access to financial resources for all,” he said.
Although CMIC’s initial focus will be on enlisting more companies to join the commitment, it aims to eventually be able to engage with regulators, promote training programs, and advocate data-sharing frameworks to assist address concerns about transparency in the cryptocurrency field.
(Adapted from GlobeAndMail.com)