Aiming to provide financial and compliance oversight to the world of cryptocurrencies, the Financial Commission has announced a new ‘Crypto’ division.
The Commission is a Hong Kong incorporated, but non-government regulatory body that was created to provide oversight and broker/trader resolutions for the online forex and binary options trading industry.
A pseudo self-regulating organization (SRO), the commission was founded by members of the forex industry to provide an alternative regulatory body to government-backed financial supervisory organizations that are often too costly for many brokers to comply with, or don’t provide adequate support for client complaints.
Early broker members include larger global brokers, such as FXOpen and Alpari.
Since launching its operations in 2013, the Financial Commission has found interest from unregulated brokers who want to provide clients with a form of client protection. In this regard, the Commission’s unique angle is that it was formed from the bottom up, with its trader/broker resolution model at its core.
Once a broker becomes a member of the Financial Commission, their customers have access to submit complaints to the Commission’s Resolution Committee which arbitrates the case.
Earlier in the year, the Commission published H1 2014 results from its dispute resolutions. For the first six months of 2014, the organization received a total of 34 complaints, for various amounts ranging between $24 and $26,000.
Forex-related complaints totaled 29, plus the remaining 5 which pertained to clients of the binary options trading services. There was a variety of issues raised in the complaints, with 13 related to payments, 12 to trading and 4 alleging to some sort of fraudulent activity.
Crypto Division Launched in Response to Brokerage Bitcoin Demand
Launching a cryptocurrency division, the Financial Commission in its public statement cited global demand for both trading and using cryptocurrencies, such as bitcoin and litecoin as a payment option.
According to the Commission, the crypto division “will tailor its approach to cryptocurrencies to help ensure that brokers offering the trading of digital currencies have processes in place to adhere to best practices, as is required in online trading of other instruments such as Forex and Binary Options related.”
Explaining this, they cited that they will create a set of rules specifically targeted for evaluating the execution process of bitcoins and other cryptocurrencies in order to provide customer oversight.
Part of this process will include providing “fair dealing, detailed reporting, and unique trade identifiers to help investigate the trade journey in cases where a specific trade is in question will be required.”
In addition, it was explained to Forex Magnates that the Commission will also be focusing on safety of fund requirements, such as those in regards to holding adequate capital and providing transparent accounting.
Overall, like its oversight of forex and binary options brokers, the Financial Commission brings to the table a centralized, but not government-backed regulatory entity, to the fractured world of bitcoin and altcoin trading.