Major US stock exchange looks to enter cryptocurrencies anti-fraud sphere

A stock exchange based in New York says it hopes that it can play a role in tackling cryptocurrency fraud using its market surveillance technology.

According to a recent paper from Nasdaq, the organisation can transplant the technology it uses to watch the currency and security markets into the crypto markets as well.

Globally, Nasdaq is the second-biggest stock exchange, and it claims that the list of potential fraud types it can combat using this method is extensive.

“Regulators, brokers and exchanges have surveillance teams that monitor activity constantly and advanced technologies to help capture and analyze abusive behaviors including pump-and-dump schemes, insider trading, wash trading as well as spoofing and layering”, it said in the research paper.

It intends to offer its services as a product to other crypto exchanges.

However, there are already indications from Nasdaq itself that locating the right sorts of firms to partner with could in itself be a problem. Ironically, the issue appears to be filtering out the crypto firms which are illicit and approving the ones which are above board.

Tony Sio, Head of Exchange and Regulator Surveillance at Nasdaq, gave some hints about the challenge. “We’re now getting approached every week or two”, he said.

“We won’t work with all of these firms though since a lot of them are quite early stage or not reputable yet”, he added.

This is far from Nasdaq’s first foray into the world of cryptocurrencies. The organisation is believed to want to be not just a stock exchange but a crypto buying and selling point as well.

“Nasdaq would consider becoming a crypto exchange over time. If we look at it and say ‘it’s time, people are ready for a more regulated market,’ for something that provides a fair experience for investors”, Nasdaq’s CEO Adena Friedman said earlier this year.

So far, several legitimate organisations in the crypto sphere have found themselves taking up Nasdaq on its offer.

One of the most high profile of these was Gemini, which is a crypto exchange set up by the Winklevoss twins.

When that partnership was launched, a spokesperson for Nasdaq indicated that the firm was very pleased with the arrangement.

It was “an important indicator of our commitment to expand the use of our market technology into non-traditional marketplaces, as well as new frontiers beyond the capital markets”, said Valerie Bannert-Thurner, Senior Vice President and Head of Risk and Surveillance Solutions at Nasdaq.

However, it is believed that overall take-up has been slow over time. Industry media outlet Bitcoin Exchange Guide is reporting that Nasdaq started receiving interest in its cryptocurrency offer two years ago, but that some interested parties actually held off getting involved until the end of 2018.

Nasdaq’s offer is clearly seen by some crypto businesses as an ideal solution to the problems of cryptocurrency fraud and the difficulties involved in watching the markets appropriately.

However, with claims going as far as saying that the technology could even “stamp out manipulation” in the markets, it remains to be seen whether it will live up to expectations.

Chris Lee

Share

Tweet

Safest Forex Brokers 2024

	Broker	Info	Best In	Customer Satisfaction Score
#1	73% of retail CFD accounts lose money. Founded: 2014	Global Forex & CFD Broker	Best Trading Conditions Visit broker	4.9
#2	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#3	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#4	81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#5	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#6	76% of CFD traders lose money Founded: 2007	Global CFD & FX Broker	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#7	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#8	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.