In a move already mooted or played out across the globe in other countries, the famous Winklevoss brothers Cameron and Tyler have submitted a proposal for a self-regulatory body to oversee cryptocurrency markets.
The brothers’ plan to police the cryptocurrency arena, where ICOs, trading, and trade-offs happen daily, is actually quite a mainstream suggestion. The U.S. Securities and Exchange Commission (SEC) and CFTC have run on a system of self-regulatory organizations (SROs) to police trading top to bottom in the formal asset sector for the longest time. All irregular movement is typically flagged by one of these bodies before an SEC investigation begins.
The Sign of a Maturing Asset Class?
The Winklevoss twins run the Gemini exchange that trades bitcoin and ether. They have made billions out of bitcoin’s meteoric rise during 2016 and 2017 and represent calculated, sober voices when speaking of bitcoin and others. Optimists rather than enthusiasts, the brothers are unofficial ambassadors of success for virtual currencies and are now looking at their next project in the world of digital coins.
Billing their proposal as the “Virtual Commodity Association,” they imagine a non-profit, self-regulatory organization geared to monitor all virtual currency markets, with special attention paid to custodians of the realm. As a first port of call, the body would formulate standards, enable protocols that render companies transparent and work closely with existing regulatory bodies like the CFTC to combat fraud. Currently, no regulators has direct authority over the spot markets for digital assets.
This self-regulation would also begin to facelift the digital coins that have given mainstream investors such alarm at times. In a recent interview, it was apparent that the Winklevoss brothers have a positive long-term view of cryptocurrencies per se, and that they are looking beyond the hype and see bitcoin and other digital currencies as the future gold.
In a joint statement, the brothers said that:
“The promise of virtual commodities and their impact on the future will be profound – but individuals and institutions need to feel safe and secure when transacting.”
Echoing the sentiments of any mature, successful market in the world, they added that they “… believe a thoughtful SRO framework that provides a virtual commodity regulatory program for the virtual commodity industry is the next logical step in the maturation of this market.”
Getting in First Paid Them Before
There is currently no directly responsible regulator overseeing the host of exchanges that trade digital currencies in the spot market. The Financial Industry Regulatory Authority, which receives funding from the fraternity, is the top cop for Wall Street brokerages.
Cryptocurrency is broadly “governed” by an amalgamation of state laws that many fear is a woefully porous and inadequate situation, inviting abuse. Brian Quintenz, the CFTC Republican Commissioner, has already called for digital exchanges to form such a private regulatory body. While congratulating the Winklevoss brothers on their initiative, he spoke of their “energetic leadership and thoughtful approach in outlining a virtual commodity self-regulatory organization (SRO) concept.”
He added that he encouraged “Gemini (or any other market participant, advocacy group, platform, or firm) to be aggressive in promoting these qualities within any SRO construct.”
The Virtual Commodity Association is imagined as funded by the fraternity, just like FIRA, and would regulate all U.S. exchanges and custodians, and would be funded by membership fees. Fiduciary duties, fiscal rectitude, information handling and cybersecurity would all be aspects of the exchanges that the body would formulate policy on, police and enforce through sanctions.