Coinbase, Kraken Respond to NY Virtual Markets Integrity Report

On the state of the cryptocurrency marketplace in the state, called the New York Virtual Markets Integrity Report.

The report took a look at how several cryptocurrency trading platforms operated and what measures they had in place to protect consumers' investments.

'These Platforms Vary Significantly in Their Operations'Per the report, the Attorney General's office sent letters to several platforms asking to voluntarily identify their operating methods.

According to New York Attorney General Barbara D. Underwood, the findings revealed that "These platforms vary significantly in their operations, internal controls and safeguard to protect consumer assets."

"Generally accepted methods for auditing virtual assets do not exist, and trading platforms lack a consistent and transparent approach to independently auditing the virtual currency that is purportedly in their possession. Some platforms do not insure against losses at all."

The New York AG's office sent letters to 13 crypto platforms.

In a post, entitled "Correcting the Record: Coinbase Does Not Engage in Proprietary Trading," Mike Lempres, Coinbase's chief policy officer, states that while his company is grateful to the NY AG's office for "Shining a spotlight in important compliance issues," they saw some aspects of the report as incorrect.

"The report states: 'Coinbase disclosed that almost 20 percent of executed volume on its platform was attributable to its own trading.' Coinbase does not trade for the benefit of the company on a proprietary basis. In order to provide an easy-to-use customer experience, Coinbase Consumer quotes a price and then quickly fills the order from our exchange platform. This takes advantage of the liquidity provided by the entire Coinbase ecosystem."

Trading platform Kraken, which also declined to answer the questionnaire, chimed in on Twitter that it did so because it doesn't have any clients in the state of New York.Thanks to the NY taxpayer for funding this research - saved our Product team a lot of time, and we got some interesting non-public info on our competitors.

Kraken Exchange September 19, 2018.Underwood says she has referred Binance, Gate.io and Kraken to the NY State Department of Financial Services for possibly operating unlawfully in New York.Cover Photo by Kai Pilger on Unsplash.