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The Winklevoss Twins Propose a Regulatory Solution For the Crypto Trading Market
The Winklevoss twins, who run the Gemini cryptocurrency exchange, have proposed a self-regulatory organization for the U.S. crypto market called the Virtual Commodity Association (VCA).
In an outline proposal posted to the Gemini website, Tyler and Cameron Winklevoss note that the VCA would be a non-profit entity that will self-regulate virtual commodity exchanges and custodians, working with government regulators such as the U.S. Commodity Futures Trading Commission (CFTC) to prevent fraud.
“As part of Gemini’s mission to build the future of money, we believe in the importance of thoughtful regulation in the virtual currency industry,” they said in a statement.
Here are the three aims for the VCA:
- Foster financially sound, responsible, and innovative virtual commodity markets through a system of industry sponsored standards, sound practices, and oversight that promotes price discovery, efficiency, and transparency.
- Incentivize the detection and deterrence of manipulative and fraudulent acts and practices, including partnering with regulators and particularly the CFTC to share or refer information, as appropriate.
- Require member firms to commit in writing, upon joining VCA, to operating their virtual commodity markets in compliance with Sound Practices, described below; and provide a sanctions based accountability program to compel ongoing member compliance.
Bloomberg notes that the CFTC, the U.S. Securities and Exchange Commission and other regulators “heavily rely on self-regulatory organizations, or SROs, to help them monitor trading in everything from obscure swaps to shares in the biggest U.S. companies.” There is currently no federal regulator overseeing trading activities on the numerous cyrptocurrency exchanges.
CFTC Republican Commissioner Brian Quintenz, who has been pushing for crypto exchanges to form an SRO, praised the Winklevoss’ plan.
“I congratulate Cameron and Tyler Winklevoss on their energetic leadership and thoughtful approach in outlining a virtual commodity self-regulatory organization (SRO) concept,” Quintenz said in a statement. “I encourage Gemini (or any other market participant, advocacy group, platform, or firm) to be aggressive in promoting these qualities within any SRO construct.”
The proposal for the Virtual Commodity Association calls for it to be governed by a board of directors and to be funded by member fees.
“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,” the Winklevoss’ said in a statement. “We 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.”