A group of major cryptocurrency firms including Coinbase, Circle, Anchorage Digital and Huobi Global are forming a new coalition aimed at cracking down on market manipulation in an effort to instill trust in the burgeoning digital asset industry.
The Crypto Market Integrity Coalition, which was convened by risk-monitoring software company Solidus Labs, is also urging digital currency companies to sign a “market integrity” pledge that acknowledges the potential for fraud in the cryptocurrency space and the need for the industry to protect investors.
“It really is about recognizing that you need entities that are focused on a fair and orderly system here, and really trying to prevent the abuses that can happen if you're not paying attention,” said Kathy Kraninger, vice president of regulatory affairs at Solidus Labs and former director of the Consumer Financial Protection Bureau.
The new alliance and pledge comes as regulators remain concerned the new market is safe for investors, despite its surge in popularity. The Securities and Exchange Commission has cited the potential for market manipulation as one of the primary reasons for rejecting several applications for spot bitcoin exchange-traded funds.
Most recently, the markets regulator vetoed a proposal from Fidelity’s Wise Origin Bitcoin Trust to offer an ETF that would track the cryptocurrency, determining that it did not meet the standards designed to prevent fraudulent and manipulative practices.
In December, the Bank for International Settlements called for more regulatory safeguards to prevent crypto fraud, arguing that the limited application of anti-money laundering rules, along with transaction anonymity, exposes DeFi to illegal activities and market manipulation.
While this new pledge is a major acknowledgement of the potential for fraud within the crypto space, it remains unclear how exactly the decentralized finance industry can curb bad actors.
The other founding members of the coalition are CrossTower, BitMex, GSR, Bitstamp, Elwood, CryptoCompare, Securrency, MV Index Solutions, the Chamber of Digital Commerce, Global Digital Finance and CryptoUK.
The coalition should help to “harmonize financial integrity standards” across market participants as many await more regulatory clarity, said Dante Disparte, chief strategy officer and head of global policy at Circle.
“Integrity is paramount to the progress and ability of our industry to continue innovating and building an infrastructure that delivers on the promise of access to financial resources for all,” he said.
Although the group will initially be focused on recruiting additional firms to sign its pledge, CMIC eventually hopes to be able engage with regulators, promote training programs and endorse data-sharing frameworks that can help to address concerns about transparency in the cryptocurrency space.
Founding Coalition Members include:
- Solidus Labs, which initiated CMIC, is a leading crypto-native risk management firm and category-definer for crypto trade surveillance technology.
- Coinbase is building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system enabled by crypto. The company started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin. Today, Coinbase offers a trusted and easy-to-use platform for accessing the broader cryptoeconomy.
- Circle Internet Financial, LLC is a global internet finance firm that provides internet-based payments and financial infrastructure to businesses of all sizes, and is the principal operator of USD Coin.
- GSR, a leading global cryptocurrency market maker and ecosystem partner integrated with 60 crypto trading venues and facilitating more than $4 billion in daily trading volume.
- Huobi Tech is a financial technology holding company driven by blockchain technology and a strategic investment portfolio. Apart from being the first licensed manager by HKSFC for an actively managed virtual asset fund, Huobi Tech provides comprehensive digital assets services including custody, trading and brokerage service for professional investors and institutions.
- Anchorage Digital, the premier digital asset platform for institutions, and the first crypto-native company to receive a federal banking charter.
- CrossTower, ranked fourth in the world by CryptoCompare, is a crypto exchange with capital market capabilities that empowers smart money to push the limits of what is possible. CrossTower provides the best-in-class services and products tailored to the needs of retail traders and institutions, including hedge funds, family offices, endowments, pensions and other market participants.
- BitMEX, founded in 2014, is one of the world's leading cryptocurrency derivatives exchanges with a fully verified user base and the creator of the Perpetual Swap.
- Bitstamp, the world’s longest-running cryptocurrency exchange. With a proven track record and mature approach to the industry, Bitstamp provides a secure and transparent venue to over four million customers.
- Securrency, a blockchain-based financial markets infrastructure company providing state-of-the-art digital assets technology bridging legacy financial systems to automated DeFi innovation with an underlying institutional-grade core global compliance framework.
- Elwood Technologies delivers market access and institutional-grade reconciliation to investors and financial services providers seeking to become a part of the exciting world of digital assets.
- CryptoCompare is an FCA-authorised and regulated global leader in digital asset data, providing institutional and retail investors with high-quality real-time and historical data, as well as industry-leading research reports and analytics.
- MV Index Solutions is a leading index provider in digital asset indexes and is registered as a benchmark administrator under the European Benchmarks Regulation since July 2019.
- Global Digital Finance (GDF) is the leading global members association advocating & accelerating the adoption of best practices and codes of conduct for the global crypto and digital assets sector.
- The Chamber of Digital Commerce is the digital asset industry’s longest established trade association, promoting the acceptance and use of digital assets and blockchain-based technologies.
- CryptoUK is the UK’s trade association representing more than 100 cryptoasset and blockchain businesses, and Secretariat of the UK Crypto and Digital Asset All Party Parliamentary Group.
- Liberty City Ventures is leading blockchain innovation across Financial Services, Web 3.0 Infrastructure, Supply Chain & Logistics, and the Metaverse. With over $1.2 billion in assets under management, LCV invests in companies building the new internet and refactoring the global economy through the implementation of blockchain technology.