The Winklevoss twins, among the first bitcoin investors, submitted an application with the SEC for a bitcoin ETF in 2013. Their application was denied by the government authorities. Since then, the brothers have submitted other applications, all of which have been denied.
Cameron and Tyler Winklevoss recently announced the formation of the Virtual Commodities Agency (VCA), a self-regulatory body for the cryptocurrency business, in their latest attempt to persuade the SEC. “We feel that placing a layer of supervision on virtual commodities cash markets, in the form of self-regulation, is crucial for consumer protection and ensuring the integrity of these markets,” the twins said on their blog. The formation of the group is in response to SEC concerns expressed in a letter earlier this year. Several issues raised in the letter include bitcoin exchange security and internal price determining methods. Should Cryptocurrency Exchanges Self-Regulate?
Regulators have applauded the attempt to self-regulate cryptocurrency exchanges. “In the end, an independent and empowered SRO-like institution might have a significant influence on the integrity and legitimacy of this nascent market.” “Today’s statement is a welcome step toward that reality,” said Brian Quintenz, a CFTC commissioner. (See also: WinklevossTwins Unveil Self-Regulation Proposal for Cryptocurrency Markets.)
Here are two facts concerning the Winklevoss twins’ self-regulation organization.
The VCAIs Industry-Sponsored
The ideas and standards that govern the SRO were developed by participants in the cryptocurrency sector rather than by authorities. The VCA’s original members include well-known bitcoin exchanges including Bitstamp and Bitflyer USA. A similar group, the National Futures Association (NFA), was created by market players in the early days of futures trading. The futures market, like the Bitcoin ecosystem today, was plagued by frauds and scandals. The NFA collaborates with the CFTC to create regulations and regulate the futures markets.
VCA Will Not Regulate The Cryptocurrency Industry
According to the VCA’s website, it will not “offer regulatory initiatives for security tokens or security token platforms.” Instead, the group will spread best practices for the operation of companies in the bitcoin ecosystem. Among these activities is the creation of a system for cryptocurrency exchanges to share information for “the objectives of marketplace monitoring with other members and with regulated exchanges and trading platforms that feature items based on virtual commodities.” The company also intends to make market data relevant to cryptocurrency pricing and trade public.
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