We have noticed a sudden influx of reports on fake trading volumes at crypto exchanges. Is it due to the advancement of analytics and reporting from companies like Bitwise, Crypto Integrity, Coventure, and The Tie? An increasing desire among market players (including Bitwise) to address the SEC’s concerns about market integrity to spur the approval of a Bitcoin ETF? The growth of blockchain and crypto lobbying in Washington? Observations on regulatory action in Canada and Japan to limit margin trading and shore up manipulative practices in their markets? A reaction to regulators’ requests for industry insight on issues like this?
There are several reasons for the growing focus on the differences between actual BTC trade volumes and the volumes reported by global exchanges. As an NFA regulated IB and a founding member of ADAM, BitOoda has a keen interest in analyzing these reports and helping the community address these types of policy and regulatory challenges. In our view, the ability for crypto investors to trust that they are receiving the best execution services based on solid market analysis depends on their confidence that the brokers, market makers, and exchanges involved in their trade activity:
(1) maintain an in-depth understanding of market dynamics across issues such as price formation, trade execution, custody, and security; and
(2) that the intermediaries they work with are “above board” and are contributing to the formation of fair and orderly markets.
This was the key consideration to entering into a strategic partnership with Tagomi, who helps our clients navigate these types of complex issues so that they can trade with confidence. Tagomi only sources liquidity and market data (volumes) from trusted trading venues, giving clients a more accurate depiction of the trading landscape.
BitOoda shares our insights and experience — such as our post last week on trade volumes and price ranges — so that investors are fully informed of potential risks as well trading opportunities in the crypto market. Regardless of how regulators respond to the proliferation of reports on inaccuracies in volume reporting, we will continue our approach of trading based on dependable data, expertly managing risks and opportunities, and collaborating with best-in-class partners. Particularly now that SEC and CFTC are increasingly reaching out to industry for advice on the overall regulatory environment, as well as specific issues such as non-DVP custodial practices for digital assets, we plan to broaden our direct engagement on these issues and further help shape the future of the U.S. crypto ecosystem.