NASDAQ could prevent fraud and other types of manipulation in the cryptocurrency exchange space, according to with a paper released yesterday by the stock exchange. This could fix some of the problems that cryptocurrency exchanges had been facing when detecting suspicious trading behavior. NASDAQ has already helped Gemini, a cryptocurrency exchange, to detect this kind of issues and act swiftly in consequence.
Compliance In Exchanges
Cryptocurrency exchanges have been always less trustable than their stock counterparts. First, every exchange is a whole different universe, and bitcoin trading is not centralized, so the situation and behavior of an asset in an exchange could be completely different than in another one. But, in a general way, cryptocurrency trading is not regulated.
This means that cryptocurrency exchanges are not mandated to search for traditional market manipulation and scam patterns, something that would be immediately detected in traditional stock markets. That is why some experts say that the cryptomarket can be easily manipulated.
But NASDAQ could prevent fraud and other types of manipulation lending its tech to cryptocurrency exchanges. By implementing it in their trading platforms, they could easily detect anomalous behaviors seeking to take advantage of the customers.
NASDAQ Could Prevent Fraud In CryptoExchanges Using Its Tech
The system that NASDAQ uses has been proved countless times in many situations, and they are eager to license their anti-fraud technology to reputed cryptocurrency exchanges that wish to improve the situation of security for its customers.
It has already licensed it to Gemini, the cryptocurrency exchange operated and owned by the Winklevoss Twins. This exchange has also been given a Bitlicense by the state of New York, approving its operation there.
About their antifraud technology, the paper states:
“Regulators, brokers and exchanges have surveillance teams that monitor activity constantly and advanced technologies to help capture and analyze abusive behaviors including pump-and-dump schemes, insider trading, wash trading as well as spoofing and layering”
letting know that they have already isolated and controlled most of the fraud related activity in the market.
NASDAQ and Cryptocurrency
NASDAQ has been really friendly with cryptocurrency and cryptocurrency related startups, even organizing a meeting dedicated to improving the image of cryptocurrency related businesses by adopting a set of policies. Also, its president Adena Friedman has told that they could very well be exchanging cryptocurrencies in NASDAQ when the space matures and regulations are laid out.
But with institutions like Bakkt and Fidelity coming to crypto, the demand for systems like the NASDAQ has will go up in no time.