Nasdaq wishes to protect cryptocurrency investors from market abuse

Recently, Nasdaq, an American Stock exchange and the world’s second-biggest stock exchange with a market cap of $10 trillion, released a report on digital asset surveillance. The report speaks about the “building transparency” and protecting investors in the emerging market.

According to the report, several potential players have not entered the cryptocurrency market because of the risks involved. This includes hacking, fraud, market manipulation and other activities which can be deemed criminal. It further stated that as the cryptocurrency market matures over-time and becomes mainstream, there is a possibility that trading would become faster. This would also result in the trade volumes skyrocketing to an extent “that humans alone will not be able to analyze events effectively”.

It further quoted that people will not be able to depend on statistical techniques and data aggregation to discover the patterns of market manipulation. As a solution for this, the trillion-dollar stock exchange has presented Nasdaq SMARTS as a solution for all these problems faced by investors in the market, with an aim to protect the investors.

Nasdaq SMARTS is a market surveillance technology that allows the compliance team of a firm to take “a multifaceted approach” to surveillance. The approach is a combination of traditional alerts-based monitoring and risk-based discovery. The technology utilizes machine intelligence and cloud in order to monitor the market effectively and maintain its integrity.

The report said:

“Ultimately, it [SMARTS] behooves digital asset exchanges to foster transparency and implement surveillance processes and technolgy that contribute to fair and orderly trading and investor protection.”

It also stated that a “well-run” transparent market would attract a huge number of investors and this, in turn, would increase the trading volume and build confidence among investors. This would gradually make the market the deepest liquidity pool for cryptocurrencies.

Gemini, one of the biggest cryptocurrency exchange platform in the space, has partnered with Nasdaq with an aim to incorporate its market surveillance technology, SMARTS. This will enable Gemini to monitor its trading pairs, including, Bitcoin [BTC], and Ethereum [ETH] paired with USD. The technology will also monitor the activity of Gemini auction process, which is used to decide the settlement price of Cboe’s Bitcoin futures contract.