Four leading US crypto exchanges have teamed up to form a self-regulatory organization, dubbed the Virtual Commodity Association. The initiative is being led by the Winklevoss Twin’s Gemini exchange, which has been joined by Bittrex, Bitstamp, bitFlyer USA. Notably, Coinbase, the US’ leading exchange, is not part of the alliance at this stage and has refused to comment on the group.
The initiative was first proposed in March and, with four exchanges now on board, will hold its first meeting in September. In a blog post on the Gemini website, Cameron Winklevoss describes the VCA as “an industry-sponsored, self-regulatory organization (SRO) for the U.S. virtual currency industry, specifically virtual commodity exchanges and custodians.”
Avoiding “Overreach” by Government Regulators
It is common practice in financial markets for leading entities to form groups like this. Self-regulatory bodies, if effective, can reduce incidents of price manipulation and fraud that often result in overreach by government regulators. In addition, SROs can present a united front when negotiating with regulators, which in turn can speed up the process of formalising new legislation.
According to the original proposal, membership will be open to all virtual commodity platforms, over-the-counter (OTC) trading firms, and other trading facilities acting as counterparties, provided they agree in writing to operate in compliance with a list of sound practices.
The Gemini blog post concluded, “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. We look forward to participating in the VCA with our peers and working with industry leaders, participants, regulators, and legislators.”
The big question, of course, is whether Coinbase plans to join the group, or whether the exchange has its own plans – an industry body that doesn’t include the largest US exchange will be severely limited.