The Association of Digital Asset Markets (ADAM) put out a draft code of conduct for cryptocurrency markets one year after its establishment. ADAM drafts a Code of Conduct for the cryptocurrency market.
The association which initially consisted of 10 members has added 5 more companies. The new members are:
- CMT Digital
The draft code of conduct which was revealed early November is an enduring effort from the companies that focus more on institutional business to legitimize the space, often referred to as the ‘digital Wild West’ by some conventional investors and regulators.
According to Dan Burstein, general counsel and chief compliance officer at the Paxos exchange, the crypto industry has been quite turbulent in its first decade, wherein it has learned lessons that the traditional market experienced over a century, like financial frauds and hacks. The Paxos exchange is one of the founding members of ADAM. Burstein further added that there is not much transparency in the industry, and investors are not confident about any company that they can rely upon for trading.
The code of conduct, therefore, presents a mechanism for:
- Information security
- Risk management
- Business continuity
In addition it also removed the possibility of conflict of interest, manipulation of trades, money laundering, and terror funding.
For instance, the proposal requires that ADAM participants “must be truthful in their declarations, use clear and precise terminology, demonstrate how their prices are strong or reflective, and provide consumers and stakeholders with any details on business relationships.”
ADAM will later on, distribute the draft for inputs to its members and it expects that at the start of 2020, the group will finalize the Code.
According to the CEO of XBTO Group, another founding member of ADAM, Philippe Bekhazi:
“As digital asset markets … become ever-more enmeshed in capital markets, it is important … to level the playing field and establish the high standards and operating protocols deserving of this promising and innovative asset class.”
Is it powerful enough?
Even though it is not a statutory document, organizations that are found to have breached the code run the risk of being disqualified and of destroying what ADAM believes will become a successful approval system for the sector.
As per Burstein’s declaration, associating with ADAM provides investors, business partners, and regulators that the company is making every effort to comply with the law of the land.
However, ADAM is not the only or first group to draft a code of conduct for this crypto industry, but Global Digital Finance (GDF), a UK-based trade association with over 70 members also released a similar document during the previous year.
GDF’s code comprises over 15,000 words, which is segregated in eight separate PDF files, whereas ADAM’s code is a tidier version 12-page single document consisting of fewer than 4,000 words.
Burstein also mentioned how they took a principles-based approach because the members of ADAM include various US companies with different business models. He further elaborated that their intentions are not to instruct people on how to operate their business, because they are part of an innovative domain.