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Elwood joins the Crypto Market Integrity Coalition (CMIC)

7 February 2022

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Supporting the sustainable growth of the digital assets industry with the Crypto Market Integrity Coalition (CMIC)

The digital assets industry has come a long way since its humble beginnings a little over a decade ago. When the Bitcoin genesis block was mined in January 2009, it’s doubtful that even Satoshi Nakamoto (Bitcoin’s anonymous creator) could have envisioned just how quickly the world’s first cryptocurrency would assert itself into the global economy as an asset class in its own right.

Of course, that growth hasn’t always been linear. From its earliest associations with the dark web, cybercrime, and money launderers to nationwide bans, highly publicised exchange hacks, and damning criticism of its energy-intensive nature, Bitcoin has suffered its fair share of setbacks. Despite it all, the adoption of Bitcoin as sound money that sets it apart from the existing fiat system continues to rise.

Bitcoin has attracted interest from a growing number of investors, including institutions and traditional investors seeking yield in today’s near-negative rate environment. With US inflation hitting a 40-year high and the purchasing power of the world’s reserve currency fast declining, for many, Bitcoin presents a life raft for a slowly sinking ship. Despite its gut-wrenching drawdowns and rampant volatility that remain unpalatable to many investors, Bitcoin has undeniable merit, whether as a means of shielding wealth, storing value, trading as a speculative asset, or simply balancing an investment portfolio.

A burgeoning industry that still lacks sufficient regulation

A whole industry has grown up around Bitcoin, with more than 12,000 cryptocurrencies today each with different value propositions and raisons d’être. Bleeding edge technology that allows for faster settlements, near-free remittances, the emergence of decentralised autonomous organisations (DAOs), non-fungible tokens (NFTs), and an alternative financial system that removes centralised entities from the equation. 

If Bitcoin shook traditional finance with the speed at which it became a fly on the windshield, the pace of iteration in decentralised finance (DeFi) is arguably even more arresting. An alternative financial system to legacy banks, exchanges, insurance companies, mortgage providers, etc. has been reimagined from the ground up with no intermediaries, lowering the barrier to entry and allowing more people to access financial services, such as taking out a collateralized loan, or earning yield on their assets.

Opportunities in this new sector abound but so too do the notable risks and pitfalls. As a largely unregulated industry, digital assets are also home to a slew of unfortunate practises, from market manipulation and wash trading to exit scams, rug pulls, and Ponzi schemes. In 2021 alone, more than $10.5 billion was stolen from crypto DeFi sites. These are all practises that must be weeded out as digital assets reach the mainstream.

At Elwood, we have always been driven by the innovation and opportunity in the cryptocurrency space, yet we are also cognizant of the need for digital assets to grow in a sustainable way. This can only happen by establishing a fair and orderly market through clear and sensible regulation that ensures the integrity of all market participants and allows for regulated entities to take part; not only in Bitcoin but in the exciting areas of DeFi, NFTs, and more. 

As a cryptocurrency trading platform built for regulated entities, we understand our clients’ need to meet their compliance burdens and operate in an environment where opaque and unscrupulous practises no longer reign supreme. Digital assets are beginning to mature as an asset class and much work has been done to clean up the inefficiencies in the space. Much more is still needed.

Joining the Crypto Market Integrity Coalition (CMIC)

That’s why we’re thrilled to be joining the Crypto Market Integrity Coalition (CMIC), a collaboration initiated by Solidus Labs and co-founded by 17 leading digital asset exchanges, trading firms, and industry associations. Through the CMIC, members are committed to creating safer markets and working with regulators to ensure that this asset class grows sustainably. 

The CMIC pledges to continuously strive towards higher standards of market integrity, risk monitoring, consumer protection, and compliance. The coalition aims to eradicate market manipulation and provide transparency into opaque inefficient practises and abusive trading behaviours, to construct the fair and orderly digital asset markets we need to stay the distance.

As Elwood CEO James Stickland commented, “The digital assets space has come a long way and we’re seeing rising interest from many traditional investors from hedge funds and banks to family offices, but these are highly regulated institutions that must meet strenuous standards of compliance. Through initiatives like the CMIC, we hope to promote greater transparency and a clear regulatory framework that will allow institutions to increase their participation and help promote the longevity and sustainability of this new asset class”.

The CMIC will take a proactive role in engaging with regulators to find solutions to crypto’s unique challenges. We call on more industry participants serious about growing the space to join us and help promote public and regulatory confidence in this new and exciting asset class. For more information or to join the coalition, see the official press release. 

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