As our readers know, we at BitOoda have a strong focus on compliance, including an industry-leading regulatory stack and a principal role in the Association for Digital Asset Markets (ADAM). One issue that we feel deserves additional focus and discussion within the digital asset community is how to remain compliant with SEC/FINRA and CFTC/NFA regulations on capturing and archiving communications, specifically those on chat, instant messaging, and mobile messaging platforms. As the U.S. market continues to mature, we feel the time is ideal to identify and move toward a messaging platform that enables industry participants to come into compliance with an area of financial regulation in which we see agencies’ attention and scrutiny increasing (as indicated, for example, by the focus areas in the FINRA and NFA licensing exams).
Many firms and investors in the space have coalesced around Telegram for their day-to-day communications with customers and partners. This messaging ranges from information sharing, to group collaboration, to specific discussions of sales, trading, and financial transactions, and more. Although regulators may differ in the details of how, for how long, and exactly what information needs to be captured and archived/retained, the thrust of their rules is that firms must maintain — and be able to provide at regulators’ request — any record related to their financial activity or customer engagement, including electronic communications.
How can the digital asset community collectively move toward the use of compliant messaging platforms for regulated financial activities? We acknowledge this will be a significant challenge to achieve market-wide — not because of system or technological limitations, but because of our community’s cultural affinity to Telegram. Telegram does not offer a capture/archiving capability, and although there are practices one can adopt to remain compliant (e.g., moving to a different platform when the communications venture into those that need to be archived), we feel strongly that a wholesale shift to a fully-compliant platform is needed. In addition, as we monitor the ongoing legal matter between the SEC and Telegram, we believe it is wise for the digital asset community to begin considering alternate messaging platforms given Telegram’s uncertain future.
We have previously written here on the launch of Bakkt and the constructive impact it can have on institutional engagement and APPLAUD their efforts to drive adoption and grow the digital asset ecosystem. What we have not yet addressed is the potential for the messaging platform associated with its parent company, ICE, to serve as an aggregating resource to help companies with compliance in crypto chat activity.
ICE Chat assists users with compliance objectives because it can either store or deliver message logs for its users. However, it is the system’s adaptability that makes us think it could be the platform to potentially gain wholesale acceptance within the crypto community. It is available as a mobile app, web-based platform, or via API, and it allows market participants to utilize specialized firms (e.g., brokers) to help them obtain best pricing and execution. In terms of the platform’s adaptability and ability to address the privacy concerns of many in the crypto space:
· For firms seeking communication logging and record-keeping, the platform can deliver data in the needed formats.
· For users looking for cost-effectiveness, basic chat functionality and some specific workflow tools in ICE Chat are free, with other options available to assist with compliance objectives.
· For firms wishing to keep control of their messaging data, ICE will move their logs to another server or third-party vendor and/or delete their data if requested.
For transparency, BitOoda has no financial interest in ICE, Bakkt, or its platforms. Our founder and CEO Tim Kelly was part of ICE’s efforts from 2007–2011 to develop and optimize ICE’s messaging system, and we simply feel that ICE Chat is the platform that would enable us to most effectively and efficiently serve our clients, as well as drive institutional engagement in digital assets. A large number of our Institutional clients already use ICE Chat for their messaging needs so we see this as a fairly seamless transition.
We invite you to engage with us on this emerging issue. Please reach out with any input or if you’re interested in arranging an ICE Chat demo; you can also find out more about the platform at https://www.theice.com/market-data/desktop-solutions/chat.