By Nick Baker/Bloomberg
Cryptocurrency players including DRW’s Cumberland trading juggernaut and Mike Novogratz’s Galaxy Digital merchant bank have banded together to draft a set of best practices, the latest attempt to clean up an industry frequently marred by scandal.
Through the newly formed Association for Digital Asset Markets, the 10 founding members intend to develop “rules for the efficient trading, custody, clearing and settlement of digital assets,” according to a statement Tuesday. They plan to write a code of conduct to “encourage professionalism and ethical conduct by all market participants, increase transparency by providing information to regulators and the public, and deter market manipulation.”
The group -- which also includes BTIG, Hudson River Trading and Symbiont -- is being advised by Duncan Niederauer, the former head of the New York Stock Exchange.
Writing a list of ways to behave may appear to be an overly simplistic fix for the cryptocurrency industry’s woes, which include allegations of rampant manipulation and difficulties getting traditional members of the financial industry involved.
But this is a response with precedent. After banks got fined billions of dollars for rigging the conventional currency market, the industry released a global code of conduct last year. Crypto exchanges led by Cameron and Tyler Winklevoss’s Gemini this year formed the Virtual Commodity Association, which also aims to raise standards in the business.
Financial regulators are probing the crypto market following suspicions of manipulation. Bloomberg News reported last week that the U.S. Justice Department is examining whether last year’s enormous Bitcoin rally was fueled partly by nefarious trading of another cryptocurrency called Tether.
The group is being announced as cryptocurrency prices fall apart. Bitcoin, which peaked around $20,000 a year ago, has plunged below $4,000.
This article provided by Bloomberg News.