Our Mission


Our mission is to work toward the goal of establishing an industry-sponsored, self-regulatory organization (SRO) to oversee virtual commodity marketplaces.

Background


The VCA is a working group that will work toward the goal of establishing an industry-sponsored, self-regulatory organization for the U.S. virtual currency industry, specifically virtual commodity marketplaces.

When evaluating this need, it is important to first note that the term virtual currency (often used interchangeably with the terms “digital asset,” “digital currency,” or “cryptocurrency”) can refer to different asset types including virtual commodities (e.g., bitcoin, ether)  or securities. The specific designation depends on the individual facts and circumstances of each digital asset’s characteristics (e.g., speech by William Hinman, Director of the Securities and Exchange Commission (SEC) Division of Corporation Finance Speech explaining his view of the ether token). The legal status of bitcoin as a commodity was articulated by the Commodity Futures Trading Commission (CFTC) in the 2015 order against Coinflip, Inc. This order stated that “Bitcoin and other virtual currencies” fall under the definition of a “commodity” as defined in Section 1a(9) of the Commodity Exchange Act of 1936 (CEA). The order was recently favorably cited by the U.S. District Court for the Eastern District of New York, in its opinion holding that bitcoin was a commodity.

Virtual commodities like bitcoin and ether are “exempt commodities,” which means the CFTC puts them in the same category as metals and energy commodities, including gold, silver, oil, and natural gas. The cash markets (or spot markets) for exempt commodities, including virtual commodities, do not fall under the jurisdiction of the CFTC; however, the CFTC does have fraud and manipulation enforcement jurisdiction over these markets and market participants under the Commodity Exchange Act (CEA). By contrast, security tokens and cash markets for security token transactions fall under the direct jurisdiction of the SEC and the federal securities laws, rules, and regulations.

The purchase and sale of commodities in the spot/cash markets has been historically exempt from the CEA and CFTC jurisdiction. Nevertheless, cash markets for virtual commodities – as it is a less well known industry – can benefit from an additional layer of oversight.  We believe that adding this layer can provide even more protection for consumers and ensure the integrity of these markets and growing industry.

Governance


The VCA will be governed by a Board of Directors  and capitalized by members. The Board structure (including a required number of independent directors) will be established soon. The primary function of the Board will be to facilitate the goals and mission of the VCA, potentially including the issuance of reports regarding the standards set forth by the VCA.

The VCA…

...will be a non-profit, independent self-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

...will help set and adopt global standards and best practices for SROs

Sound Practices


Members shall work with the VCA to adopt and follow the Sound Practices:

Custody

Establish custody protections and security measures appropriate for virtual commodities.

Customer Communication

Adhere to customer communication and disclosure standards that are clear, accurate, fair, and timely; members must not make promissory, false, or exaggerated statements or claims.

Transparency

Provide appropriate transparency regarding bids, offers, executions, and other relevant data to the public; adopt policies to avoid conflicts of interest.

Rules-Based Markets 

Maintain and enforce a system of marketplace conduct rules; implement policies and procedures to respond to and address customer concerns and complaints.

Cyber and Information Security

Implement and maintain current best practices with respect to cybersecurity, information security, and recordkeeping.

Surveillance

Monitor and surveil markets to detect and deter manipulative and fraudulent acts and practices.

Information Sharing 

 Agree to enter into reasonable information sharing agreements for the purposes of marketplace surveillance with other members and with regulated exchanges and trading platforms that list products based on virtual commodities.

Cooperation with Regulators 

Among other things, agree to report instances of manipulative and fraudulent conduct to the CFTC and other regulators as appropriate.

Working Group Members


Contact


We appreciate your interest and support.

For press/media related inquiries, please email press@virtualcommodities.org.

If you are interested in becoming a future member of, or looking for further information about the VCA, please email inquiries@virtualcommodities.org

We look forward to engaging with industry leaders, participants, regulators, and legislators on this proposal.