The Winklevoss-backed Virtual Commodity Association (VCA) is planning to become a Self-Regulatory Organization (SRO) for cryptocurrency exchanges.
Yusuf Hussein, head of risk at cryptocurrency exchange Gemini, published a Medium post yesterday discussing the organization’s goals and structure. According to Hussein, VCA plans to establish itself as “an industry-sponsored, self-regulatory organization (SRO).” Currently, it has four cryptocurrency exchanges – Gemini, bitFlyer, Bittrex, and Bitstamp – as members.
Hussein stated that VCA has launched six committees to provide guidance and oversight to the cryptocurrency industry in several areas. The committees are as follows:
- Banking Secrecy Act (BSA) and Anti-Money Laundering (AML)
- Custody and Security
- Market Integrity
Hussein told Coindesk that the firm will collaborate with traditional finance firms in order to establish standards and practices for the crypto industry and “facilitate cross-market information sharing.” It will approach Congress for SRO designation after developing a set of standards.
Hacks and irregularities in trading at cryptocurrency exchanges came into sharp focus, when prices skyrocketed at the end of 2017. For example, the introduction of trading in Bitcoin Cash at North America’s biggest exchange Coinbase was accompanied by a sharp spike in its price. In another case, lax security standards at exchanges in Asia have resulted in security breaches, with hackers siphoning away cryptocurrencies worth millions of dollars from there. Regulatory authorities in these countries encouraged operating exchanges to form SROs and establish standards for industry conduct. Launched last year, the Winklevoss twins venture is similar in scope and ambition to FINRA and NFA (National Futures Association) – two self-regulatory bodies that were formed after rampant scandals in the respective industries. But the absence of Coinbase, arguably one of the most pivotal places for trading, from the venture is notable.