Association class

New Crypto Association Aims For Market Integrity

In late 2018, something interesting happened when cryptocurrency exchange Coinbase listed a new decentralized finance (DeFi) token called 0x: it went from $0.65 to $1.08, and the Coinbase effect was born.

Back in September, crypto industry research firm Messari estimated the average rise in the Coinbase effect at 91%.

Why? Coinbase has been very slow to list new assets, and when it has, it has done good due diligence – far more so than most competitors. As a result, investors began to see a Coinbase listing as a sign of quality in a market plagued by fraud, initial coin offering (ICO) scams, and price manipulation. So when he announced he was listing a new coin, prices jumped.

That’s why it’s worth noting that Coinbase is one of 17 exchanges, trading companies, and investors that have come together to create the Crypto Market Integrity Coalition, or CMIC – a new industry association whose goal is to help to cultivate “a fair digital asset market to fight the market”. abuse and manipulation and to promote public and regulatory confidence in the new asset class.

While the cryptocurrency industry improves in lobbying and dealing with regulatory agencies, the core problem remains: many regulators and elected officials still see a market ripe for manipulation and fraud, and with raison. In March 2019, asset management Bitwise sought approval from the Securities and Exchange Commission for a bitcoin exchange-traded fund, or ETF.

To do this, he undertook an in-depth study which showed that 95% of the trading volume on the CoinMarketCap industry price tracker was “fake and/or uneconomic in nature” as sketchy exchanges engaged in trading. to attract customers with higher prices. volume and influence prices.

Despite this, Bitwise Asset Management stated that “the real bitcoin market is significantly smaller, more orderly, and more regulated than commonly believed.”

Although its request was denied by the SEC, Bitwise argued that by basing its pricing data on 10 honest exchanges – Binance, Bitfinex, Kraken, Bitstamp, Coinbase, bitFlyer, Gemini, itBit, Bittrex and Poloniex – it would be able “to alleviate the Commission’s concerns about market manipulation, custody, liquidity, pricing and arbitrage.

Change times

As the cryptocurrency industry gets better at lobbying – remember the 99 US senators trying to squeeze a last-minute change into the $1 trillion infrastructure bill in August last – the crypto market is still considered extremely risky.

Read more: U.S. officials hope to change infrastructure bill crypto rules

It’s a problem that has led Gary Gensler, a former MIT cryptocurrency instructor and current SEC Chairman, to call crypto the “Wild West” of finance, and Sen. Elizabeth Warren (D-Mass.) To complain that “DeFi regulation is effectively absent and – unsurprisingly – this is where scammers, cheats and scammers mix among part-time investors and first-time crypto traders.

See also: Sen Warren calls DeFi the ‘most dangerous’ part of crypto during Senate hearing

What’s remarkable about CMIC is that its members say they actually want to do something to address the broader issues of the crypto markets, while trying to convince the powers that be that there is much of the industry that can be trusted.

Founded by Solidus Labs, a blockchain data and cryptocurrency abuse monitoring firm, CMIC members include exchanges Coinbase, BitMEX and Bitstamp, crypto market maker GSR, stablecoin issuer Circle Internet Financial and the institutional custodian / bank charter holder Anchorage Digital.

“Crypto is in a very different place than it was three or four years ago – there are crypto companies today with more robust and technologically advanced risk and compliance programs than traditional institutions” , said Asaf Meir, co-founder and CEO of Solidus Labs. “We want to convey that to the public, along with our deep commitment to meeting current and future challenges.”

Will it work? Well, CMIC has a steep hill to climb, but it should be noted that much of the argument on Capitol Hill these days about regulating the cryptocurrency industry revolves around the best way to do it without hampering innovation.

“For us to be the leader in the next generation of internet technology, we need a new regime built around the nature of digital assets,” Rep. Patrick McHenry (RN.C.) told PYMNTS’ Karen Webster. in October. “Current law and existing regulatory structures do not match the unique nature of these assets.”

Will it work? An encouraging sign this week was the SEC’s decision not to outright deny a pair of the current Bitcoin ETF proposals, instead asking them to show how they would avoid market manipulation.

Related: SEC request suggests opposition to Bitcoin ETF may fade



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