VanEck's Digital Assets Director on Why Bitcoin Isn't Too Susceptible to Market Manipulation

  • Director of Digital Assets Strategy at VanEck gave three reasons why he thinks BTC markets are not particularly prone to market manipulation.
  • Reasons: Emergence of OTC markets with regulated indices, stricter KYC/AML checks, and oversight from CFTC.  

Gabor Gurbacs, the director of Digital Assets Strategy at VanEck, a New York-based investment management firm with $47 billion of assets under management, recently gave three specific reasons as to why bitcoin (BTC) is “not uniquely susceptible to market manipulation.”

Gurbacs, a mathematics, sociology, and German language (studies) graduate from Williams College, explained that “there exist significant surveilled markets with proper” anti-money laundering (AML) / know-your-customer (KYC) checks. As CryptoGlobe reported in November, Refinitiv, a global financial markets data and infrastructure service provider, was contracted by Malta-based crypto trading platform, Binance, - in order to provide it with a fully-automated KYC application.

More Organizations Looking To Enforce AML / KYC

In general, there are an increasing number of cryptoasset exchanges that have started complying with proper KYC / AML guidelines. Due to the increasing number of reports regarding market manipulation, particularly when digital currency prices were at their all-time highs in late 2017, most regulatory authorities have taken the necessary and appropriate measures to enforce AML checks.

Moreover, key players in the crypto industry have launched initiatives that may potentially promote best practices - including developing a self-regulatory framework. As covered, a group of ten leading financial services and technology firms established the Association for Digital Asset Markets (ADAM) - in an effort to formulate a Code of Conduct (“Code”) for the digital asset markets.

Notably, the founding members of this group include billionaire Mike Novogratz’s full-service crypto merchant bank for digital assets, Galaxy Digital, and Duncan Niederauer, the former CEO of the New York Stock Exchange (NYSE), has been appointed as ADAM’s Advisory Board Member.

Self-Regulatory Body To Check For Market Manipulation

Notably, ADAM will formulate specific rules for “custody, record keeping, clearing and settlement.” The self-regulatory organization will also aim to monitor activity in the digital asset industry, including which it suspects is related to “market manipulation.”

According to Gurbacs, the second reason why BTC is not susceptible to market manipulation is that more cryptocurrency over-the-counter (OTC) markets have emerged. An increased number of OTC markets with “regulated index providers” means BTC price cannot be as easily manipulated as before, Gurbacs believes.

Finally, the third reason why Gurbacs thinks the bitcoin trading market may only be as prone to manipulation as the more established traditional markets is because: “BTC is a commodity and fits under established” US Commodity Futures Trading Commission’s (CFTC) jurisdiction.