Bitstamp, Inc., bitFlyer USA, Inc., Bittrex, Inc., and Gemini Trust Company, LLC, have joined hands to form the Virtual Commodity Association (VCA) Working Group. The working group will work towards establishing an industry-sponsored, self-regulatory organization (SRO) to oversee virtual commodity marketplaces, the group said on Monday.
The VCA will develop a framework for industry best practices, promote transparency and work with regulators including the US Commodity Futures Trading Commission (CFTC) to prevent fraud and manipulation in markets of digital currencies such as bitcoin and ether.
The VCA will have an executive director and independent board but in the meantime, Maria Filipakis will act as the interim executive director. Filipakis formerly worked as an executive deputy superintendent at the New York Department of Financial Services (DFS) and helped create the state’s BitLicense permit.
An initial meeting will be held in September during which participants will discuss guidelines for membership, best practices, and staffing.
Currently, no federal regulator in the US has direct authority over the cryptocurrency trading sector. Instead, platform operators must comply with an assortment of state laws.
Brian Quintenz, a CFTC commissioner, welcomed the VCA initiative, and said in a statement on Monday:
“Given the absence of federal oversight jurisdiction in the crypto market, in February and again in March of this year I called on the crypto platform community to come together and develop a self-regulatory organization-like entity that could develop and enforce rules.
“I am pleased that progress has been made on such a concept. Ultimately, an independent and empowered SRO-like entity could have a meaningful impact on the integrity and credibility of this young marketplace. Today’s announcement is a positive step towards that realization.”
John Roth, chief compliance and ethics officer at Bittrex, said the establishment of the VCA will hopefully improve transparency, accountability and security across all digital currency trading platforms.
“This effort will also complement our discussions with regulators and legislators about developing a long-term solution that creates a fully-compliant environment for blockchain while encouraging innovation, economic growth, and US leadership in the industry,” Roth said.
Yusuf Hussain, head of risk at Gemini Trust Company LLC, said the move was “the first of many steps in policing the digital asset markets and answering the call of regulators.”
Meanwhile, Hailey Lennon, director of compliance at bitFlyer USA, said that regulations in the cryptocurrency space were evolving to encompass the new technology. “Industry leaders with extensive knowledge and who are impacted by regulations should really be part of the conversation,” Lennon said.