Recently, one of Australia’s largest cryptocurrency exchanges, BTCmarkets, announced its Australian Digital Commerce Association (ADCA) certification: the first exchange in Australia to be fully certified. ADCA is an organization which promotes blockchain development in Australia, and acts as a voice for the wider financial technology industry. It describes itself more specifically as an association that provides ‘an industry network for businesses implementing or evaluating blockchain or distributed ledger technology.’
The certification is issued when a company utilizing blockchain technology proves they are adhering to the ADCA’s strict Code of Conduct. The code itself was developed by the ADCA to help guide businesses operating within the crypto sphere employ best-practice standards. A certification from the ADCA confirms that BTCmarkets has passed an independent third party audit in adherence – an audit which must be passed once every six months.
This marks BTCmarkets as Australia’s leading exchange in the area of compliance. It confirms that the exchange is following practices which it states protects the consumer, remains ethical in all corners of the business, and continues complying with regulators.
This could be viewed as a largely a positive announcement, but the certification does not necessarily affect consumers in a positive way: it’s a matter of perspective. Those consumers who have the goal in their mind to leave legacy financial infrastructure behind, to walk away from custodian forms of storage, fees and a watching eye on their own transaction should take away that the ADCA certification puts more eyes on their transactions.
Consumers who trade in cryptocurrency as a asset class, and remain completely compliant – the bankers and day trading whales – will be unphased or pleased with the announcement. ADCA certification ensures that the exchange itself is built on a highly secure network, with consumer data protections and a strong vulnerability management program in place. The added assurance of security is the biggest benefit for consumers in relation to this certification, however, no system is completely safe, and there is no guarantee that a breached exchange and loss of coins will translate to any tangible protection for users with coins in the exchange. Cold storage will forever be the safest method, just as an airgapped computer will always be harder to breach.
BitGrail was an Italian cryptocurrency exchange which recently announced its insolvency following an exchange breach which bled the exchange of 17 million Nano (XRB) tokens, valued at approximately $170M USD. The official rhetoric of ‘stolen in a hack’ has not been confirmed and as such, there is a growing portion of the community affected that believe the exchange operator, Firano, has mislead users and XRB core team members – as publicly stated by Nano’s Core Team.
It’s this kind of behavior that the ADCA certification hopes to irradiate through the third party audits and strict compliance. An exchange operating within the boundaries of this certification will not likely be able to do what BitGrail evidently has done: the dreaded ‘exit scam’.
The cost of this guarantee may be considered high for those not constantly trading and consequently leaving funds in the exchange. But such is the cost of operating in Australia, with its strict Know Your Customer and Anti-Money Laundering/Counter Terrorism Financing laws which govern cryptocurrency at this time.
The certification guarantees that BTCmarkets holds all transaction data for seven years. It guarantees the business collects and holds extensive customer data – photographs, drivers license scans, multiple levels of information – all of which can be quickly and easily be requested by government agencies.
It’s hard to not be cynical with the clear direction and intention of authority this year. The value of the cryptocurrency market simply became to big to ignore or put to one side any longer. This certification has been painted as a consumer protection program, yet actual ‘first degree’ consumer protection accounts for very little. It’s only if defining user protection in a wide and doublespeak manner, such as ‘user protection by protecting society through policing, and therefore protecting all consumers within society’ that the scope of this certification becomes truly protectionist. It certainly doesn’t appear to protect funds from an ‘exit scam’, rather it only reduces the risk of one through bi-annual third party audits.
Ultimately this certification takes exchange regulation up a level by providing peace of mind to governmental agencies – taxation agencies, police agencies and intelligence agencies. The global conversation of world wide authority in 2018 continues. Regulate, regulate, regulate.
Featured image from Shutterstock
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Con’s a writer. His education background is law, where he’s published in law journals on the legal issues of crypto-currency. His opinion editorials tend to focus the relationship between people and technology, as well as the societal challenges technology can present. He’s consulted for non-profit privacy and digital rights groups, aiding governmental submissions. His passion is for information security, technology and the intertwining legal issues.