Last August, Gemini announced its participation in the Virtual Commodities Association (VCA). It joined the VCA because “in order to build the future of money, thoughtful regulation is necessary to create healthy markets.”
The VCA’s goal is to establish itself as an industry-sponsored, self-regulatory organization (SRO) for the U.S. virtual currency industry, specifically virtual commodity marketplaces. This designation will allow the VCA to operate similarly to SROs in other industries, most notably the traditional financial industry, where the Financial Industry Regulatory Authority (FINRA) and National Futures Association (NFA) have self-regulatory authority over financial institutions.
One of the first steps in this process is to create a framework which will eventually form sensible regulation for virtual commodity marketplaces. To do so, the VCA has launched six key committees that will help set standards, sound practices, and oversight.
The VCA will also be governed by a Board of Directors. Yusuf Hussain has been appointed President of the Board and Hailey Lennon, Esq., Head of Legal and Regulatory Affairs at bitFlyer USA, Inc. has been appointed Secretary of the Board. Special Advisors, which will oversee all committees, are Ellen Zimiles and Alma Angotti (Navigant Consulting, Inc.) and Dana Syracuse (Perkins Coie, LLP).
Several regulatory agencies have called upon the cryptocurrency industry to provide better oversight and surveillance of cryptocurrency markets. Through these committees, which will be led by financial and crypto industry subject matter experts, the VCA will adopt best practices and standards commonplace in traditional financial markets for cryptocurrency exchanges and custodians.
The six committees and leads include:
BSA/AML — led by Michael Carter (Alvarez & Marsal) to apply Bank Secrecy Act BSA/Anti-Money Laundering (AML) and Know Your Customer (KYC) controls, including blockchain analytics, transaction monitoring and investigations.
Custody and Security — co-led by Adam Cohen (Redgrave LLP) and Nicole Becher with a focus on implementing and maintaining current best practices for cryptocurrency custody, which is based heavily on cryptographic principles.
Enforcement — led by Philip Moustakis (Seward & Kissel, LLP) to enforce the regulatory framework established by the VCA, keeping the VCA members accountable. This includes maintaining a system of marketplace conduct rules, implementing policies and procedures, and responding to and addressing customer concerns and complaints.
Insurance — co-led by Matthew Gaul (Mayer Brown, LLP) and Alexander Sand (Eversheds Sutherland US, LLP) to establish minimum, appropriate insurances and coverages for cryptocurrency exchanges and custodians.
Market Integrity — led by Michael Roe (Exiger), to facilitate cross-market information sharing, consolidated audit trails and cross-market surveillance to detect and deter manipulative and fraudulent activity.
Tax — leader announcement forthcoming, will focus on establishing tax framework and interpreting and establishing tax code law as it relates to cryptocurrency trading.