Sometime during September, a new self-regulatory body called the “Virtual Commodity Association Working Group” will hold its first meeting since inauguration. US-based exchanges bitFlyer, Gemini, Bitstamp, and wallet service Bittrex reportedly formed the new association that its goal is to “improve cryptocurrency regulations.”
In this opinion piece, we look at how the crypto markets could benefit from such a self-regulatory association of leading exchanges.
For one thing, many government authorities around the world are still unsure of what cryptocurrencies are, hence the difficulty in coming up with regulatory standards that will govern the space. This indecisiveness has allowed both genuine and fraudulent cryptocurrency projects to grow together and remains the “Achilles heel” for the adoption of cryptocurrencies.
To keep the crypto markets healthy and also attract an influx of new investors, some sort of regulation has to be in place, and the existence of self-regulatory organizations will go a long way to get and keep things in a nice shape.
Self-regulation to the rescue
“In equities, securities exchanges have their own organization to come up with common standards and jointly respond to declarations by regulators,” VCA Group.
For a wider adoption of cryptocurrencies to happen, investor protection across blockchain and cryptocurrency projects must be achieved, at least to an impressive level. That will be a criterion for the digital assets to finally compete against traditional security assets such as stocks and bonds.
A self-regulatory group with top exchanges as members will no doubt add a new layer of security and trust to the crypto markets. It will be a kind of “gatekeeper,” since industrial participants have to meet up to some standards, and will also give evidence that the crypto markets are mature and ready to get on to the next stage of growth.
Also, the existence of such a self-regulatory body and strict compliance with industry standards could clear the way for the approval of a Bitcoin ETFs. For emphasis, the SEC pinpointed a lack of “structure or regulatory safeguards” as part of reasons for not approving the Winklevosses’ ETF proposal last month.
Would a cryptocurrency ETF be granted if there are some sort of self-regulatory standards? Maybe.
Standards created by organizations like the VCA could go on to form the basis for any regulatory framework that the SEC or other regulators will come up with in the future. Setting up such initiative now will indirectly allow the crypto markets to make the rules that will govern its future existence.
Coming at a time when compliance issues and lack of regulation remain the biggest challenge for cryptocurrencies, makes the newly formed group an interesting prospect to keep an eye on.
In the light of what can be achieved by such self-regulatory organizations, crypto enthusiasts will likely give their support and hope that more exchanges would lend their support very soon.
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