Recently Licensed Malaysian Digital Asset Exchange Tokenize Announces Partnering with Market Surveillance Provider Solidus Labs
Thursday, June 4, 2020 12:10 PM
KUALA LUMPUR and NEW YORK, NY / ACCESSWIRE / June 4, 2020 / Tokenize Xchange, one of only three firms fully approved by the Securities Commission of Malaysia to operate a digital asset exchange in the country, announced today it has partnered with crypto market surveillance provider Solidus Labs as part of its license application process.
In partnering with Solidus Labs, Tokenize is adopting Wall Street-grade market surveillance standards, the highest available in digital asset trading.
"Solidus Labs' crypto-native approach proved very effective for us, allowing us to not only tackle the unique challenges of our evolving industry but also bridge the gap with regulators by leveraging Solidus' traditional finance background." Says Qi Yu, Tokenize's Founder and CEO. "As an ambitious digital asset exchange facing complex licensing requirements, it's an ideal solution. We look forward to harnessing these advanced tools to provide users a safe digital asset trading environment."
"Tokenize is ahead of the curve in terms of compliance, risk and user protection strategy, as clearly indicated by the Securities Commission of Malaysia's decision to approve their full operating license," says Solidus Labs CEO Asaf Meir. "We're proud to help enable their strategy and growth with our tailored solutions, and look forward to working together to deliver a high integrity exchange"
Tokenize will harness the New York-based firm's market surveillance and compliance software to monitor for trade abuse risks, ensure market integrity, and comply with the SC's requirements under the provided license.
Solidus Labs' crypto-native surveillance tool utilizes a rule-based detection layer, common in traditional markets, but is augmented by machine learning to provide a comprehensive behavioral-based risk monitoring tailored for digital assets' unique complexities and new threats.
The threats addressed with the new capabilities include common concerns known from traditional markets like wash trading, spoofing and pump-and-dump, as well as new crypto-specific manipulation typologies like cross-market manipulation schemes and hack-and-trade fund siphoning.
According to the CryptoCompare Exchange Benchmark report, only five out of 159 ranked exchanges employ an externally provided surveillance system - and those who do are leading the ranking for trading volume credibility. As a result, numerous studies consistently raise concerns that as much as 95% of crypto trading volume is potentially manipulative.
Due to the lack of high market surveillance standards across the crypto industry, it is difficult to account for the exact amount of funds manipulators swindle from legitimate crypto traders, but the number is estimated at tens of billions of dollars. An analysis by the Wall Street Journal from August 2018, as one example, estimated that pump & dump schemes in crypto markets accounted for $825 million in trading activity in only six months, translating to hundreds of millions of dollars in lost funds.
Market manipulation is one of the biggest hurdles to increasing institutional adoption and regulatory approval of digital assets. Citing concerns about high levels of manipulation, the United States Securities and Exchange Commission has so far consistently rejected Bitcoin-ETF applications, with Chairman Jay Clayton stating the agency will need to see effective market surveillance. Regulators globally are introducing compliance guidelines and intensifying licensing requirements, with leading agencies like the Hong Kong Securities and Futures Commission and the Malaysia Securities Commission listing detailed requirements for market surveillance.
Tokenize was founded by Hong Qi Yu, who started his career as the lead programmer in a Fintech startup. As a blockchain enthusiast, Qi Yu ventured into Digital Assets trading and subsequently established Tokenize to enable more like-minded enthusiasts in the region to be able to trade in a safe and secure platform. In April 2020, Tokenize obtained full approval from Securities Commission Malaysia to operate as a regulated Digital Asset Exchange (DAX). This is a significant milestone for Tokenize as it positioned us among the few exchanges in the region to be able to offer fiat-to-digital asset pairings.
About Solidus Labs
Founded in New York in 2017 by Goldman Sachs veterans, Solidus Labs offers a crypto-native market surveillance platform built from the ground up for the unique compliance challenges of digital assets and crypto data. Harnessing advanced technologies like machine learning and SaaS principles, Solidus Labs' mission is to help crypto businesses grow faster - and safer - by reducing the operational costs of compliance and minimizing regulatory risk. The firm currently serves a global client base including exchanges, brokerages, regulators, self-regulatory organizations and others. As a thought leader on crypto compliance,Solidus Labs is the founder of the Digital Asset Compliance and Market Integrity Summit (DACOM), keynoted by SEC Commissioner Hester Peirce, as well as a Founding Advisory Council Member and Market Integrity Chair of Global Digital Finance.
Solidus Labs - Chen Arad, COO, [email protected]