The New York Attorney General’s office published a report this week that investigates the practices of cryptocurrency exchanges in the state.
It was undertaken on the basis of protecting and informing residents, with evidence conclusively pointing to areas that exchanges need to improve in order to ”ensure the fairness, integrity, and security of their exchanges”.
The ten exchanges that chose to participate in the Attorney General’s report include Bitfinex, bitFlyer USA, Bitstamp, Bittrex, Coinbase, Gemini, itBit, Poloniex, HBUS and Tidex. Of these platforms, just Bitfinex, Tidex and HBUS are not regulated by the New York State Department of Financial Services.
The report claims that some exchanges have failed to implement standard investor and consumer protections; this including adequate security measures as well as market surveillance protocols.
One aspect of this pointed to is an apparent lack of measures to impede ”abusive trading activity”. While the report acknowledges some exchanges have steps to implement safeguards and ”police the fairness of their platforms”, this cannot be said for all of those that participated in the study. The lack of market surveillance capabilities such as those found in traditional trading venues is said to restrict their capabilities of identifying and putting a stop to suspicious trading patterns.
Despite these criticisms, the Attorney General’s office is not looking to shut down or restrict any of their operations. Rather, the report has been conducted to help educate New York-based customers, and encourage the cryptocurrency marketplace to review its own flaws in order to preserve the integrity of transactions.
Should exchanges choose to ignore the advice and not adjust policies of their own accord, in the future the Attorney General’s office may well take legal action against the exchanges.
”As the sector matures, the OAG expects responsible trading platforms – in coordination with consumer advocates, regulators, and law enforcement – to expand the transparency, security, fairness, and accountability of their businesses,” it reads.
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