CoinGecko, the data markets aggregator, is stepping up its game once again. Four months after launching the original Trust Score metric, the Singapore-based company is set to unveil the upgraded 2.0 version of Trust Score, one that will filter out exchanges that purport “fake exchange volume.”
As per a press release shared with AMBCrypto on 11 September, the aggregator aims to address four key concerns that will look into exchange liquidity from a more holistic perspective, and thereby allow for a “more robust exchange ranking system.” The four “major measurements” include exchanges API technical coverage, scale of operations, estimated cryptocurrency reserves, and regulatory compliance.
In the previous version of the Trust Score which was released in May 2019, the two elements used to asses an exchange’s real trading volume was order book data and web traffic, while accounting for the baseline of the exchange’s ‘reported trade volume.’
The four metrics added to the latest version of the Trust Score, each have their own weightage. Liquidity will take 50 percent precedence, in terms of exchange ranking components, while the scale of operations and the API technical coverage take 30 percent and 20 percent, respectively.
In terms of scale of operations, CoinGecko will look at normalized volume of an exchange against that of “all other exchanges.” The API Technical coverage will be graded on the basis of 7 factors including, tickers data, historical trades data, order book data, and public documentation, among others.
Since the initial version of the Trust Score was released four months ago, Bobby Ong, CEO of CoinGecko, told AMBCrypto in an exclusive interview that one of the main metrics that will be included in future versions will be looking at exchange’s crypto-reserves. In light of the same, CoinGecko has partnered Crystal Blockchain from Bitfury that will conduct regular on-chain analysis to ascertain how much reserves exchanges have. Only three cryptocurrency reserves will be looked at in the current Trust Score version, namely, Bitcoin, Ethereum, and Bitcoin Cash. Ong added,
“An exchange that reports a large amount of trading volume would be expected to have a correspondingly larger reserve. The reverse would be true for a smaller exchange. If an exchange does a lot of volume yet has low reserves, this could be perceived as a sign that something is not right.”
With the influx of institutional investors and their adherence to regulatory approval, CoinGecko will give importance to exchange compliance as well. In order to fortify this addition, the aggregator partnered with Coinfirm’s AMLT Network to “analyze regulatory compliance of exchanges.” Seven “risk categories” under this metric will be looked at, namely, License and Authorization, Sanctions, Senior Public Figures, Jurdisdiction Risks, KYC Procedures, Negative News, and Anti Money Laundering [AML].
However, the data aggregator has added that the last two metrics, reserves and regulatory compliance, are not “ready for inclusion in Trust Score 2.0 grading algorithm” yet and that they require “further refinement.”
On asked whether an exchange’s regulatory case prompted CoinGecko to include this metric, CEO Bobby Ong told AMBCrypto that no”specific” exchange led them to the same. Rather, it was part of their “continuous improvement plan” to improve exchange transparency, he said.
CoinGecko’s move to expand the boundaries of the Trust Score to provide a more holistic view of exchange dynamics does point to rapid developments in the space. Several reports this year have highlighted the need to tackle “fake exchange volume,” especially at a time when institutional investors are investing billions into crypto. The need to create a “robust exchange ranking system” is pertinent at this maturation stage of the industry.
With cases like QuadrigaCX, Cryptopia, and Bitfinex making the rounds on crypto-twitter and spilling over into the mainstream, the need to address regulatory missteps and reserve requirements will be an important addition for future tools to combat fake exchange volume.
Facebook to Face Global Regulators about its Libra Cryptocurrency Project
According to recent news, Global regulators will interrogate Facebook shortly regarding its Libra cryptocurrency, even though the EU governments expressed concerns that the digital currency poses a danger to financial stability. As per the Financial Times, Facebook needs to face 26 national banks, inclusive of the US Federal Reserve and the Bank of England, will meet with delegates of Libra in Basel shortly, the FT stated, referring to authorities.
Moreover, Facebook has pitched Libra as an approach to democratize money, providing banking for first-timers, and making a format that is independent of any one nation. However, it is the last part that has worried the authorities. Facebook opined that it invites open exchange with controllers. In a recent discussion, Libra told Financial Times –
“In the nearly three months since the intent to launch the Libra network was announced, we have prioritized engagement with regulators and policymakers around the world, we welcome this engagement and have deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.”
Besides, the meeting will reportedly happen among Libra and the Committee on Payments and the Bank of International Settlement’s forum, Market Infrastructure. Facebook authorities will be questioned about the design and scope of the cryptocurrency, and a report will be filed for G7 finance minister in October.
Regardless, Libra‘s founders have additionally been asked to respond critical questions regarding the currency, Financial Times said. Further, Nations inclusive of France and Germany have publicly condemned the social media giant’s Libra venture, saying it presented dangers to EU states Sovereignty.
The Libra Association, an alliance of 28 members set up together by Facebook to help the cryptocurrency to realization, includes Uber, Visa, Mastercard, Spotify, and the subsidiary Calibra, among few. Moreover, the members all made a non-restricting guarantee to invest at a minimum of 10 million dollars.
The forthcoming meeting came later when French Finance Minister Bruno Le Maire cautioned that France would not approve the development of cryptocurrency Libra on European soil. He opined that the digital currency poses a risk to the fiscal power of governments and causes issues on illegal tax avoidance, terrorism financing, and market strength. Further, He additionally voiced concerns that Libra can help individuals to abandon national currencies during an emergency, even more complicating the efforts of the government to deal with the economy.
Nevertheless, the governments have voiced strong concerns over Libra and other digital currencies that are seen fit for destabilizing the financial system and lessen the power of governments and central banks. Even though it faces issues, the head of the Libra Association stated that Libra cryptocurrency would be released at the end of 2020.
Facebook’s David Marcus Responds to Critics Over Libra ‘Threat’
The head of Facebook’s Calibra – the entity created by Facebook to provide financial services including a digital wallet for the planned Libra cryptocurrency – has spoken out in response to claims from authorities that the project poses a threat to nations’ “monetary sovereignty.”
In a Twitter thread on Monday, David Marcus, who co-created Libra, said he wanted to “debunk” that notion – one most notably promoted by France’s Economy and Finance Minister, Bruno Le Maire.
Le Maire said last Thursday that, with Libra, “The monetary sovereignty of states is under states is under threat,” and further threatened to block the project’s development in the EU.
Marcus said that Libra will be “backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve.” As such, Libra will not be creating new money. That function will “strictly remain the province of sovereign nations,” he said.
The Calibra chief further clarified that Libra is being built to be a “better” payment network utilizing national currencies, and “delivering meaningful value to consumers all around the world.”
Marcus welcomed the attention from regulators, however, saying:
“We believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable.“
His comments come as a group of 26 central banks – including the European Central Bank, the U.S. Federal Reserve and the Bank of England – meets in Switzerland to grill the Libra Association over the scope and design of the project.
In the thread, Marcus also pledged to continue working with “central banks, regulators, and lawmakers to ensure we address their concerns through Libra’s design and operations.”
OKEX Korea Drops 5 Privacy Coins Citing FATF Rules
Regulatory pressure on cryptocurrency exchanges to stop providing users with access to so-called privacy coins is growing.
The South Korean arm of the Malta-based OKEX exchange announced early on Monday that it is to delist five cryptocurrencies that provide extra privacy features for users. From Oct. 10, the exchange will no longer support trading in Monero (XMR), dash, zcash (ZEC), horizen (ZEN) and super bitcoin (SBTC).
In its notice, OKEX Korea said it will delist cryptocurrencies that “violate laws or regulations [and] policies of government agencies and major agencies.”
Specifically, in this case, it cited the “travel rule” recommendation to national regulators from the Financial Action Task Force (FATF) as the reason for pulling the five coins.
The exchange said that as per FATF’s rule, “it is recommended that exchanges be able to collect relevant information such as the name and address of the sender and recipient of the virtual asset.”
As such, it had decided to delist the cryptocurrencies that did not allow that data to be obtained.
The U.K. arm of Coinbase also dropped support for zcash in August, likely due to the need to identify users when required by authorities.
This summer, FATF finalized its recommendations to its 37 member nations, including a controversial requirement that “virtual asset service providers” (VASPs), including cryptocurrency exchanges, pass information about their customers to one another when transferring funds between firms.
The so-called travel rule has been a requirement for international banks when sending each other money on customers’ behalf for some time, but has been described as onerous for blockchain firms and harmful to user privacy.
The global anti-money laundering body gave members 12 months to implement the new recommendations that, while not mandatory, could see nations not complying put on a finance blacklist.
Since June, compliance solutions providers in the crypto space have been moving to launch systems aimed to help exchanges pass each other the required data.
OKEX Korea said that customers have until Dec. 10 to withdraw any of the five delisted coins from the platform.