On March 13, 2018, Gemini founders Cameron and Tyler Winklevoss published A Proposal for a Self-Regulatory Organization for the U.S. Virtual Currency Industry.
"There has been recent discussion among U.S. regulators and legislators about the need for further oversight and self-regulation of the virtual currency industry," they wrote. "As such, 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."
The Winklevoss twins proposed the Virtual Commodity Association (VCA), a move that was quickly praised by Commodity Futures Trading Commission (CFTC) commissioner Brian Quintenz.
"I congratulate Cameron and Tyler Winklevoss on their energetic leadership and thoughtful approach in outlining a virtual commodity self-regulatory organization (SRO) concept," said 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."
In their post today, the Winklevoss brothers explained that the VCA:
- "will be a non-profit, independent regulatory organization that does not operate any markets,
- will not be a trade association,
- will not provide regulatory programs for security tokens or security token platforms, and
- will be in compliance with global standards and best practices for SROs."
The association would aim to:
- "Foster financially sound, responsible, and innovative virtual commodity markets through a system of industry sponsored standards, sound practices, and oversight that promotes price discovery, efficiency, and transparency.
- Incentivize the detection and deterrence of manipulative and fraudulent acts and practices, including partnering with regulators and particularly the CFTC to share or refer information, as appropriate.
- Require member firms to commit in writing, upon joining VCA, to operating their virtual commodity markets in compliance with Sound Practices, described below; and provide a sanctions based accountability program to compel ongoing member compliance."
The brothers also provided a list of "Sound Practices" as well as membership requirements.
The Winklevoss proposal follows shortly after the CFTC was granted a preliminary injunction in its case against Patrick K. McDonnell and CabbageTech, Corp, a ruling which supported the agency's 2015 finding that virtual currencies like bitcoin are commodities.