Bitcoin Forum

Ok, I might have some difficulty explaining the concept, but the background for this is simple. Let's say the US SEC wants to make sure that global Bitcoin exchange prices cannot influence the Bitcoin price in their regulated market, would it not be easier for them to just allow price determination based on trading prices within exchanges that adhere to their regulations?

Let's say, they can introduce specific guidelines with rules that needs to be adhered to for exchanges to be included in their market and for price determination. If exchanges adhere to these requirements, then institutional investments can be based on your exchange trading volume, but if you do not adhere to these requirements, your exchange price will be ignored?

Can a separate market like this, help to reduce Bitcoin price manipulation for local markets that wants strict control over price manipulation and can they operate independently from a global Bitcoin market?

Ps.. I am not a professional trader, so my lingo might be wrong, so I hope you can understand what I am saying. Merit goes to the person that puts this in a post that explains this with the correct terminology for everyone to understand.  ;)

No, this kind of market won't succeed because crypto traders are greedy and are always taking advantage of cryptos volatility.

I don't think a market can be detached from the global market without censoring information (like North Korea). Since price manipulation is not backed by real demand and supply, and the US market is a big market, I think it will be very difficult to manipulate the market after this bill is imposed.

Traders will use every arbitrage opportunity to make inefficient market slowly become efficient.

So in short, different spheres of trading would be created since each country would have their own set of guidelines for their local market aside from the global markets that are already competing with one another. I don't think this will pan out well, considering that there are a lot of arbitrage traders that are still existing and wants to get the better pricing/leverage for their investments, and for sure, this will stagnate the local markets and just propel the global markets, still. By following strict guidelines for an exchange to come in on a certain country, they need to edit and alter a lot of their terms and perhaps their structure, and that wouldn't be too pleasant at all. Also, knowing that bitcoin per se is a global, decentralized network, why do we need to divide the markets further into different clumps on different countries when we can just trade it altogether wherever our documents and KYC permit us?

It can be done in theory but not in reality. Given the nature of bitcoin, any central authority won't be able to control its price, no matter whatever rules and regulation they bring in!! It is because SEC doesn't control its supply!

If SEC was the supplier of bitcoin, then it would have been possible! Parallel markets witout any internal relation can co exist but it only gives opportunities for arbitrage and more price manipulation because there is no one to control the supply!

US is not all taken in concern while investing on cryptos. They are ready to accept it. Since the USD market is occupied the world they will ready to take other currencies against that.
If US accepts bitcoin then their own currency will start facing failures meanwhile for other world countries will enjoy with bitcoin.

If this idea could be true, then this could help the price manipulation by the exchanges reduce. But, this thing is just not the reality. If SEC could hold the supply of bitcoin this could be put to reality. And all exchange are following SEC guidelines right? But, another counter idea for this are the exchanges. They will disagree on this idea. Since, people are enjoying volatility of bitcoin then they much likely to have the manipulation than the idea stated in the OP.

I'm sure that something like this is already working on CMC.
They have some rules required for exchanges to get listing on CMC. For example there are some local exchanges in Venezuela and Nigeria where prices are far over the current market prices but they are not available for non residents and their local currencies are fucked up.
CMC also adjust volume that was reported by exchanges.

To isolate the market you would need to buy a desserted island and also populate that and start everything over again different from what we have today , even Google  :P
It's far too impossible to have a market like this that too of cryptocurrency to be separated from the entire link , and manipulation is always there, and manipulation in Bitcoins market is not something that is given to them it's something they earn kind of by investing more.
The more you invest the closer you are to the throne , it's really world like that therefore people are always gonna invest according to their comfort we cannot decide for them if the market is going to be stable, it's not fiat, we don't have a Bitcoin government, it's something that was made this way , even though sometimes you do wanna find the ones responsible for the low price due to huge sell off and just leave them alone on the desserted island that you brought earlier  ::) but at the end of the day that's how it was made thus we need to accept it.

it can't, if so, then the bitcoin's volatility will be considered a failure because it only focuses on the incoming trader. and that will make the growth of bitcoin prices very slow. there must be many factors that influence the value of bitcoin globally, not only the trader itself.

Exactly, we saw massive differences between prices in different countries and they co-existed without problems. Yes, the highly inflated prices was due to abnormal high demand in local exchanges and this was not available to non-citizens, but it still existed. So we know it can be done.  ;)

The SEC can for instance say that they only allow say Coinbase and Gemini prices, because they adhere to the SEC's strict requirements for price determination. <So you will have to register at these exchanges, to get the benefit of these high or low prices.>

The rest of the world can continue as normal, with their own exchanges and the prices that are being determined by their own volume. <supply & demand>  ::)

The significant price difference could happen because of country-specific risks that prevent traders do arbitrages (higher international tx fees, inefficient market, etc.). However, this kind of market should be small in size or not significant.

Usually, small markets follow big markets.
What most likely to happen is that the global market would follow the US market.

I'm more than sure that that's the way everything gonna work.
SEC would issue its own regulations and all exchanges would have to follow them. If not, then SEC would sue them or if exchange is somewhere in the other country SEC can force banks to stop working with it and freeze its accounts. They have many ways to influence on such services.

As for the guidelines part and forcing the exchanges to comply and monitor them this is pretty easy.

Now, the main problem in addressing this scenario is how much will the SEC really want this and how much collaboration it can get not only from other US institutions but from the rest of the world.

Case A, the lone wold tactic has close to zero chances of doing anything to global prices, or interfere with them. The SEC simply lacks the capacity of creating a virtual trade environment in the US cut from the rest of the world, it wasn't meant to do this its role is of a supervisor not a guard against the exterior, it's not designed to do this and it lacks the power that can only be granted by law.

Now, case B, when the SEC gets all the agencies to their side and backup from the Congress.

In theory, it can be achieved as the SEC would simply force exchanges that don't comply with them to cut off US citizens from trading. Then it could use their power to force every company in the US to stop dealing with exchanges that don't abide with these rules.
And at this point, it gets tricky as it's one thing to avoid US citizens from using your platform is something totally different to try to avoid US banks and their subsidiaries that are all over the world. Basically, some will be simply cut off from the flow of money and the ones that can cash on the US funds will have a better position, look at it like some sort of state aid.

After this, they can simply start to pick up the foreign exchanges that don't obey their rules one by one, and we all know the US doesn't give a crap if it's NZ, Greece, Romania or Thailand when it comes to arresting people and putting them on a plane before anyone has a clue what's happening.

So yeah, in theory, if the SEC goes full berserk it could achieve some sort of control over the markets.
Of course, there would be still a black market, but if they do manage to get some allies on board the black market would be so small it would not be able to influence the price anymore.

But this scenario is totally improbable, it requires tons of paperwork, of laws, of cooperation between government agencies and at this point, they simply don't give a damn about the prices. 100 billion? 200 billion? Those are peanuts right now.

Interesting statements, thanks for the input.  ;)

As for forcing other citizens from other countries not to use US exchanges, well that has been done in the Bitcoin online gambling industry already. <This was even done with sites that was not based within the US> ...so it is not totally unrealistic that they can apply the same rules to a regulated exchange environment in the US.

A lot of the US exchanges are already heavily regulated, like Coinbase and Gemini, so it will just be requirement that has to be met.  ???

I think people would still choose the well-established market no matter how big the differences are. The prices rely on the volatility of cryptocurrency and I guess despite having rules in a new market, traders would still look at the trading volume. It's hard to establish a new one.

How does this reduce manipulation of prices?

Doesn't this further increase the potential for prices to be manipulated, since your proposal would essentially mean that SEC is the sole determinant of what exchanges are allowed to be included in this so called "price index", and which ones are ignored? If they wanted to, they can remove any exchange that they don't want from this index.

Also, who says that the market will actually adhere to the price index, as opposed to still buying/selling at the best rates, even if that means that they are using an unregulated exchange?

I really don't understand where you are going with this, nor do I see a point in a central entity publishing any type of price index that filters out unregulated exchanges. Plus, wouldn't arbitrage opportunities arise which lead to prices eventually levelling anyways?

I guess that could be possible, but as long as there is a whale interfere, the market will be on the manipulations of the price because the whale will want to join in the centralize and decentralize market and they want to make another profit from both markets.

The separate market can operate independently from a global bitcoin market but like I say before, the whales will always search on the lowest volume market so they can play with the price and sometimes, they can make the price up and down in anytime but of course, if there are other whales, then they cannot do in everytime.

But I wonder if there is any separate market that could operate without any whales inside the market? Because I am sure that in every market we know or register, there must be one or two or more whales gather in that market.

I think they want to hold the bitcoin price not to go down or up too much when the time is not right. But I am not sure about that, that is only my imagination.

It doesn't. In all cases, regulated markets have been subjected to manipulation too, people just don't read much about it because it's done professionally.

The very fact that we currently have so many exchanges competing with each other, makes it way harder for one entity to force its will upon the global price, while that back in the days was much easier to do. I'm not saying there is no manipulation right now, but those who are doing it only succeed in the very short term.

Every attempt to break up or down will be corrected by an even wealthier entity not long after, and the rest of the market follows because the charts indicate a trend that they will respect.

Bitcoin is a global currency that enables 24/7 interaction. I would steer clear of any regulated body trying to isolate the local market from the rest of the world.

If I may pit this in simple term what you are trying to say is that bitcoin market will have two different phase that is the one of the global bitcoin market as you proposed and this global bitcoin market will be under the regulations of the government e.g the US sec and the other market will be the one on the bitcoin decentralized exchange where traders trade bitcoin and have no fixed price and get manipulated easily. Well this is only achievable when there is a coronation between the two that is a meeting point and that meeting point will be on the Forest market where all currency get traded.

A separate market is not one of the great options. The crypto market is considered a decentralized market and manipulation has made many traders excited. This is also the most special point of the market and I like manipulation. We should not have such separate adjustments, it will not bring a positive effect to the crypto market.

They can't. There is no way there is regulations on bitcoin price when it comes to SEC or anything else, bitcoin is free market and the price of it will never be regulated, there is no governments or banks or anything behind it, its purely peoples money and we can make it go down or go up. They can certainly increase it or decrease it depending on their news or reactions but they can't "control" it like "bitcoin can't go up 20% in a day" type of things won't happen.

It is just against the nature of bitcoin and nobody in the world has the power to do that. They can "ban" bitcoin to drop the price or they can "support" bitcoin to increase the price but when it comes to regulating it there is no one with that power. That is why it is called decentralized and that's why we like it.

I think the global bitcoin market should be referred in economics as a free market because it is not necessarily regulated or monitored with rules. Therefore, the free market can be a measure of determination of prices in regulated market. That is for real or physical market terminology but strictly to bitcoin, I don't think there is a regulated market so far and this is why the volatility is not going off. If there was regulation, the market won't be independent of itself.

I want to also state that, economic or physical experience will not work for bitcoin.

The result when only seen at the end only but the possibility is available half of its situation and it needs to improve when it comes to making the the better market and there will be lots of support will be the only way to get succeed.

That is the fact about everything in cryptocurrencies market!  I am a trader and I buy and sell bitcoin in other to take advantage of the volatility for profits.  If the current state of the market continue then we should not expect a secondary bitcoin market.  It is truth that we are still at the early stages of the whole thing but most of the traders like me are just here for profits.

Washington's control and influence in international finance is waning, and Trump seems intent on accelerating this decline. You guys need to forget about the SEC and Bitcoin, and watch what they are doing with the US dollar. I gather some states are now changing the category, and thus the taxation, of gold coins and bullion bars. Obviously they are now planning to replace the dollar.

I guess you mean some sort of parallel market price for Bitcoin. I doubt it can be done by the regulator without forking & creating another version of Bitcoin with different prices.

By the way, your ideas will likely favor only the holders of the regulated Bitcoin by encouraging alot of arbitrage trading on permissionless exchanges while it will be hard for traders that do not qualify to trade on the regulated exchanges.

The only way this could work is to create more Bitcoins  on Bitcoin blockchain (through fork?) that are customely built for the regulated exchanges.

if that really happens, then they will direct the cryptocurrency, of course they will profit as much as possible, because they have a large block of course, and eventually most countries will follow it

The main thing is that no one is in control, so these exchanges will just continue to do as it pleases them. They are free to always manipulate prices and do whatever they want and also set fake trading volume to deceive. That's one of the reasons why you should only go for exchanges that are well trusted and has good reputation.

Cryptocurrency is mainly more of mind games. And I don't even think they are ready to let the government do as you have said here.

Market price gaps are already happening without the need for the SEC to add any other regulation for it. Just take a look at how South Korea has done it, they smartly made arbitrage trading impossible for foreigners just by requiring their traders to be based on their country before they even be allowed to trade in their exchanges. All local exchanges required their users to submit proper KYC with proof that they live in South Korea. And so far the way I see it with big price gaps during the 2017 bull run we saw they are somehow not influenced to the foreign markets, simply because no foreign body can infouence it directly.

yes, there is no government or bank that can regulate bitcoin price movements unless indeed bitcoin can be concentrated in one country like the US dollar which is the benchmark of global currencies. bitcoin is indeed a free market that is controlled by its users / people who use it, there is an increase and decrease in market prices of course based on the demand and supply in it and cannot be done by people who intentionally play the price

I think it would be better if the market aligns itself. As far as I know, this is the most viable system at the moment. What you propose at one time was used in many countries with a planned economy such as the USSR and other countries, and now it is often used in those countries that are experiencing a crisis. For example, in Bolivia. This is detrimental to the market. Suppose that on all exchanges the price will be higher and on one will be lower, but there will be many willing to sell and everyone will rush to that exchange that will not be allowed to sell in order to sell profitably. This is how the shadow economy is created.

A second bitcoin market to succeed, yes maybe is possible but this can take time and this will need a lot of people who invest on market to have a long run and only after can succeed.

Yes - but the reason the SEC refused to allow a traded ETF on bitcoin is precisely because they're not sure which exchanges should be allowed to set the price. As you said, during the 2017 bull run, the Korean exchanges were showing a higher price - should that price be in the basket of exchanges valuing the ETF? They were also worried about the Chinese exchanges and their fake volume (no longer a problem now as China has shut down all the exchanges). And of course there is the Bitfinex problem.

IMO the SEC will only allow an ETF if the bulk of volume on crypto trading happens on regulated exchanges. As long as most of it happens on exchanges outside their jurisdiction, they'll continue to say no to an ETF.

by looking at the future potential of the analysis we have, of course the second bitcoin can generate a lot of profits, but it must be smart to see developments in the future, so that we don't waste time waiting for it. on the other hand there are actually many projects from the lower ranks that skyrocket because they have the trust of various elements

It's already stated by SEC itself about what the factor that prevents bitcoin ETF to be approved by SEC. I suggest you take a look on this link https://www.theblockcrypto.com/2018/11/27/sec-chair-crypto-etf-approval-is-dependent-on-exchanges-being-free-from-manipulation/
The problem is not about there must be a centralization of bitcoin trave volume in the regulated exchange site but the crypto market must free from the manipulation. I think that's already answered various question about the rejection of bitcoin ETF.