Gemini and Winklevoss Twins Propose New Self Regulatory Organization

in #regulations4 years ago

A better regulatory environment on the way?

At least that is the hope.

In a recent blog post on the Gemini website, Cameron and Tyler Winklevoss proposed a new Self Regulatory Organization (SRO) for regulating crypto commodities.

The post is titled:

"A Proposal for a Self-Regulatory Organization for the U.S. Virtual Currency Industry"

It can be seen in it's entirety here:

https://gemini.com/blog/a-proposal-for-a-self-regulatory-organization-for-the-u-s-virtual-currency-industry/

Why create this new SRO?

Currently there is a gap regarding cryptocurrency/crypto asset regulation.

The CFTC has jurisdiction over fraud and manipulation in the crypto asset markets and market participants, but it doesn't have jurisdiction over the cash markets where the majority of trading takes place.

The legal status of whether a token is a security or not lies with the SEC.

However, again, that means there really isn't much regulation, if any, over the crypto asset spot markets.

That is where this SRO would come in, which according to their proposal, would be called the "Virtual Commodity Association".

Cool, how would this Virtual Commodity Association work?

Basically, the goal would be to provide more oversight where some of the other agencies leave off.

It would function as a non-profit, independent organization governed by a board of directors.

It would be modeled in part after the National Futures Association, an SRO focused on the derivatives industry.

(Source: https://gemini.com/blog/a-proposal-for-a-self-regulatory-organization-for-the-u-s-virtual-currency-industry/)

This organization will be made up mostly of Virtual Commodity Platforms as well as other OTC Trading Firms, among other types of business that service the space.

Why this is needed:

The Winklevoss twins wrote this in regards to why they are proposing this new group:

"We believe adding an additional layer of oversight on virtual commodity cash markets, in the form of self-regulation, is important for consumer protection and to ensure the integrity of these markets."

And then this:

"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."

And this:

"We look forward to engaging with industry leaders participants, regulators, and legislators on this proposal."

(Source: https://www.coindesk.com/cftc-official-backs-winklevoss-brothers-crypto-self-regulation-bid/)

It appears they may not be too far off... It's already getting major endorsements.

Check out this response from CFTC Commissioner Brian Quintenz:

"Ultimately, a virtual commodity SRO that has the most independence from its membership, the most diversity of views, and the strongest ability to discover, reveal, and punish wrongdoing will add the most integrity to these markets. I encourage Gemini (or any other market participant, advocacy group, platform, or firm) to be aggressive in promoting these qualities within any SRO construct."

(Source: https://www.coindesk.com/cftc-official-backs-winklevoss-brothers-crypto-self-regulation-bid/)

It appears these ideas might have some real sticking power!

The sooner we can get some clarity on regulations for all parties involved, the sooner some of these things can start going back up again.

Stay informed my friends.

Image Source:

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The problem with regulation is that the big players are manipulating the crypto market. Will this new entity go after them? Will offshore exchanges sign up? I think that in order for adoption of regulation to take place, the space needs to benefit monetarily. That is how things get done. Governments can try all they want, but they only have jurisdiction in their own turf. I do like the idea of cracking down on bad players of ICO.

I have heartburn about the SEC identifying cryptocurrency as securities. If the SEC would get rid of the clause that only allows people with net worth of $1 Million or more not including their primary residence, I would be on their side. It does not matter how much experience or education you have, you are not allowed to participate unless you are rich. This is a clear example of the rich protecting their ability to stay rich. Until that day comes where this clause is removed, I think the SEC should be abolished. The reason the SEC was formed is no longer being accomplished and is of little use if all they do is protect the wealthy.

Which big players are you referring to when you say they are manipulating the market?

#1 John McAfee - he has lost credibility, but still manipulated the market and knew damn well what he was doing. He is not an idiot. He tweeted his favorite coin. That coin subsequently got pumped and dumped. Did he stop? Not at first. He knew that he was manipulating the market and continued to do it. It got so bad that people were creating trading bots that would trade based on McAfee tweets. Did McAfee stop? It took him an extremely long time to stop, and only after backlash got out of hand. I'm sure he made a ton of money. Not directly traceable. Guaranteed that he made a ridiculous amounts of money.

#2 Charlie Lee - Cofounder of Litecoin and sold all of his litecoin and told everyone that to get out of cryptocurrency right before crypto market crashed. Who does that? How would the world react if Apple CEO said that he sold all of his Apple stock and told everyone to get out? Answer - he would go to jail. Charlie Lee got off scott-free and people think that he walks on water. Good Grief...

#3 Bloomberg - A supposedly reputable investment news organization. They have relentlessly published FUD and helped to drive the crypto market down during the crash. They twisted the truth and reported fake news. Bloomberg has ties with powerful people, especially those in the stock market. Why did Bloomberg wage a relentless attack on cryptocurrency with fake news? Wouldn't that hurt Bloomberg's credibility? Does it matter when there are powerful investors calling the shots? Every time a Bloomberg article gets published, thousands of other articles are spun off of the Bloomberg article... Twisting the negative news further. No one pays attention to old news anyway. The only thing that people pay attention to is news during the last 24-48 hours. Nobody is going to investigate Bloomberg.

I can go further, but I don't want to get into a huge rant.

Very Thoughtful response. I second this ^^

We already have just about everything in this world regulated by some "authority." Why can't there be 1 unregulated market, where the individual claims their own responsibility and does their own Due Diligence?

Because supposedly we cannot take care of ourselves or police ourselves, which ironically has mostly been true throughout history lol.

Ha! You are right. The majority of people are sheep and need to be told what to do and how to be lead. Kinda sad in a way...

Leave it to the Winklevoss Twins to be pushing something like this. I give them credit in moving things forward here, but it seems like they’re moving really slow compared to other areas of the globe. Thanks for the post!

“Responsible regulation” will help us all who believe crypto assets are the future. I think the opening comments of Coinbase testimony to Congress is a great way of thinking about it:
https://blog.coinbase.com/coinbases-written-testimony-for-the-subcommittee-on-capital-markets-securities-and-investment-47f8a260ce41

Thank you for linking this. I hadn't seen this yet. This is YUGE. Now hopefully Congress and regulators respond favorably.

I think you're right. There's a HUGE gap regarding crypto asset regulation. If regulation will be done then these people in the authority should think carefully what they should do. So far, it seems they're still confused about cryptocurrency.

We will also have to look at the coming G20 meeting...
To much talk about regulations regarding crypto anti money laundering...

I'm not sold on it. As it is, there is no black and white in cryptocurrency whatsoever and many of the politicians trying to regulate it have no idea what they are even talking about. I have a feeling in the next few years, there will be regulation groups put together to enforce policies that are more beneficial to the federal government more than the crypto holders themselves. Everyone wants a piece of the pie, including the government.

Yes good points and I agree. Check out the recent letter by Coinbase talking about those issues:

https://blog.coinbase.com/coinbases-written-testimony-for-the-subcommittee-on-capital-markets-securities-and-investment-47f8a260ce41

some time my mind say its sold but am long term investment am again see market will boost up just like 2017 what you say?

A very interesting discussion, there are new ideas in there. Verry useful because there are teaching a good cooperation.

The internet started as a decentralised platform but the most valuable applications within it are centralised. Like FB and other social media sites, YouTube and google.

We may see a transition to more regulated, more centralised applications within the decentralised crypto world too and quite possibly we need it. When you see the destruction of complete freedom - like Silk Road, we see that humans may not yet be consciously ready for complete freedom

I agree. Almost like something like a Steemit.com being built on the steem blockchain. :)

Virtual commudity could be working because there is a strength communities behind this

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To much talk about regulations

I want to see an SRO, but don't like the idea of the SEC coming into the space too much. I am fine with the CFTC bc the director seems like a nice guy toward crypto but the SEC will do no good and will slow down the innovation of alternative capital markets such as crypto imo

I agree, the SEC seems almost like they hate it. Like there is a personal issue with it. As opposed to just wanting to "protect investors" which is supposed to be their mandate.

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