Reports out today highlight new movements in the USA in what seems to be an investigation into cryptocurrency exchanges safeguarding procedures.
The Attorney General for New York, Eric Schneiderman launched an inquiry into the operations of 13 major cryptocurrency exchanges, including Gemini, Binance and Coinbase. The inquiry aims to review information on how the exchanges operate, their internal procedures, protection of customer assets and any overall conflicts of interest.
The inquiry seems to be using questionnaire-based methods in which officials at the exchanges need to complete paperwork and return it back to Schneiderman’s office by the 1st of May 2018, that’s in just two weeks’ time.
According to BTCManager.com, Schneiderman said:
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money, yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms. Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”
The inquiry has been established in order to allow enforcement agencies to better understand the practices of cryptocurrency exchanges. It has of course been motivated by historical cryptocurrency exchange hacks, such as the $500million hack experienced by Japanese exchange, Coincheck.
What do we make of this?
The inquiry, at least gives exchanges an opportunity to be honest and really, it gives authorities a good benchmark through which they can work out what is good practice and what is bad practice.
Overall, this is a very promising move from the New York Attorney General. It is not an aggressive move to regulate, moreover it is an opportunity for honest data collection that could potentially lead to advantageous regulations being established in the USA.
This does of course assume that the exchanges in question do act with honesty and integrity. Any form of deceit here would be pretty damaging for the reputation of cryptocurrency exchanges and would no doubt lead authorities and the New York Attorney General into carrying out a more in-depth and draconian style investigation.
We expect a report to come from Schneiderman’s office in the days after the deadline, which is in just under two weeks’ time. Let’s hope for the sake of transparency in the USA, the exchanges make their best efforts to remain honest and of course, meet the deadline set. Otherwise, what so far seems like a very friendly approach to leading an investigation, could be come a whole lot more intrusive.