As reported by Bloomberg, US stock exchange Nasdaq believes it can solve the serious issue of manipulation in the cryptocurrency market. A report released on the first of November by Nasdaq indicated that the exchange had significant experience in dealing with the manipulation and fraud issues so prevalent in the cryptocurrency industry. Nasdaq uses ‘SMARTS’ technology which is said to detect, investigate, and analyze suspicious trading activity automatically.
Manipulation in the crypto industry
Regulatory authorities in the UK and USA are currently investigating price fixing in the bitcoin market, which is known for its incredible volatility (despite recent stability). Aside from price fixing, the ICO industry is beset with scandals, and there are frequent hacks on currency exchanges. Exchanges are where most cryptocurrency gets stolen, according to data released from Blokt. The Nasdaq report reads that –
“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.”
As it stands, the cryptocurrency industry is incredibly lucrative for people with any kind of knowledge on how to manipulate these markets. There are little regulatory controls on cryptocurrency exchanges, and few are left in any doubt that the market is actively rigged. Many significant exchanges in the cryptocurrency industry are already using the Nasdaq surveillance technology including Gemini and SBI Virtual Currencies. Nasdaq is reportedly getting approached by multiple exchanges to use their technology.
Skepticism within the crypto community
While some welcome increased regulation and surveillance within the cryptocurrency industry, others view any kind of centralized interference as contravening the ethos of the DLT movement. As cryptocurrency and fiat finance mesh, there appears to be a tendency for crypto-assets to resemble the fiat derivatives that they were intended to replace.
Institutions seem to be taking over the crypto market, and claims by Nasdaq that it can resolve all the
problems associated with crypto have been met with mirth by cryptocurrency advocates. Many have taken to online platforms with statements such as “I’m sure they can stop it; all they would have to do is turn off their manipulation bots” and “Just tell JP Morgan to stop selling futures and shorts. They make money on the way up and on the way down.”
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.