Cryptocurrency derivatives exchange BitMEX has not played ball by U.S. regulatory rules, which hurts the crypto industry as a whole, according to David Carman, a former veteran Chicago Board Options Exchange trader. Carman currently helps head up a Chicago-based global crypto regulatory association, seeking to bring regulatory clarity to the industry.
"If they're not going to behave, they're just going to hurt the industry and drag it down," Carman told Cointelegraph regarding BitMEX.
"What's BitMEX thinking of? What are any of these companies thinking of that they can operate like this and not be above board and be honest and have a high level of integrity, and be transparent. What do they think is going to happen here?"
BitMEX recently faced public legal action from two U.S. governing bodies — the CFTC and the DoJ — on a number of accounts, including a lack of regulatory compliance. Authorities took the exchange's chief technology officer, Samuel Reed, into custody.
Carman noted BitMEX's business composure damages the crypto industry, as well as the company itself. "This is really unfortunate this has to happen," he said. "It just scares away people."
In contrast, however, stiff regulation has also stifled the crypto space in some ways, making growth more difficult.
Carman sits on the board of the Global Digital Asset and Crypto Currency Association, or Global DCA, which, has two main objectives, according to the former trader: "We want to minimize and get rid of the bad actors as much as possible, and we want to provide clarity, and really security, for the market, especially the institutions."
In light of the BitMEX news, Carman also pointed toward the recent clarity provided from U.S. Office of the Comptroller of the Currency, or OCC, which essentially gave federally-chartered banks approval for digital asset custody. "How many of them are going to jump in on that?" Carman said. "I think the regulatory environment is just not clear enough," he added.
"Then you get something like this happens and it just gives the industry a bad name," he said referencing the BitMEX situation. "Also, better to regulate yourself than to be regulated by regulators," he added.
"Stuff like this is just going to bring the regulators probably down hard on the whole industry when crap like this happens."
The Global DCA regulatory group is a long-time effort, which originally stemmed from a meeting in March 2019. The effort has since undergone a number of changes leading to its current name and form.