One of the things that is stopping the adoption and the legitimacy of cryptocurrencies today is the possibility of price manipulation within the market. Price manipulation is said to be rampant in today’s crypto market. For instance, you have the likes of Tether that has been suspected to be manipulating the price of Bitcoin.
In addition to this, it is the very same reason why the US Securities and Exchange Commission rejected a number of Bitcoin ETF applications a few months ago. Included in the rejected applications is the Bitcoin ETF application of Cameron and Tyler Winklevoss. It was the second time around that Cameron and Tyler Winklevoss had their application rejected.
Price manipulation is a serious problem these days. In May, it was reported that the US justice department decided to open a criminal probe into the possible manipulation in BItcoin trading.
Nasdaq Can Stop Price Manipulation?
According to NASDAQ, the world’s second-largest stock exchange, they have a market surveillance technology that can “stamp out manipulation” in the crypto market. According to the paper, “Regulators, brokers and exchanges have surveillance teams that monitor activity constantly and advanced technologies to help capture and analyze abusive behaviours including pump-and-dump schemes, insider trading, wash trading as well as spoofing and layering”.
Bitcoin has become less volatile in the last few weeks. Bitcoin has been said to be less volatile than Netflix and Amazon shares. Come to think of it, this is something unusual considering how Bitcoin skyrocketed last year from just around $1,000 to near $20,000 by the end of the year.
NASDAQ had Gemini as its first crypto client for its SMARTS Market Surveillance solution. This is the same crypto exchange that is being operated by the Winklevoss twins. This partnership was described as a “major milestone” for the tech by Valerie Bannert-Thurner who was the Senior Vice President and Head of Risk & Surveillance Solutions for NASDAQ .
Since partnering with the Winklevoss twins, the demand for the market-surveillance, the demand for their surveillance solution has spiked up. According to Tony Sio who is NASDAQ’s head of exchange and regulator surveillance, “We’re now getting approached every week or two”. He also mentioned that “We won’t work with all of these firms though since a lot of them are quite early stage or not reputable yet”.
Can This Be a Game Changer?
Can this be a game changer for the crypto industry? Will the US Securities and Exchange Commission consider this as a potential solution that can help resolve their hesitation for a Bitcoin ETF?
It is also not surprising why NASDAQ is now going after the crypto market. Since the start of the year, its CEO Adena Friedman has expressed bullish sentiments on the crypto market. However, Friedman reiterated that there should be a more robust regulation. There were also indications that NASDAQ wanted to have their own crypto exchange platform.
There is no denying that regulatory clarity is still needed at this point. But considering this kind of initiative, it is a possibility that doubts surrounding the possibility of price manipulation will one day be removed from the crypto market.