Less than one month after an analysis concluded that 95% of the trade volume reported on CoinMarketCap is fake, the cryptocurrency data tracking site announced it will exclude exchanges that do not provide more live data from its price and volume calculations.
Exchanges have 45 days to fall into line, the company said in a May 1 blog post celebrating its sixth anniversary. Live trading and order book data will be required initially.
At the same time, the blog post made very clear that CoinMarketCap does not intend to police exchanges in any way. The post somewhat melodramatically compared the impact of such a “paternalistic” approach to burning people at the stake for saying the earth revolves around the sun.
“Our approach towards ‘regulating’ the space is therefore not through censorship or making arbitrary judgment calls, but by contributing to an environment that supports the free flow of ideas,” the post said. “When dealing with so much conflicting and unverifiable information, there is only one viable course of action—defer judgment and let the market decide.”
CoinMarket Cap is the main source of data about 2,100 digital currencies traded on exchanges around the world. Its calculations of the market price, trade volume, and market capitalization of cryptocurrencies have long been considered the best obtainable version of the truth.
That was called into question on March 21, when crypto index fund provider Bitwise Asset Management released an in-depth survey of 81 exchanges listed on CoinMarketCap and concluded that only 10 were reporting data accurately. The study claimed to have found extensive evidence of market manipulation such as wash trades, and vastly over-reported trade volume.
CoinMarketCap is taking other steps beyond those two live data requirements. In the same blog post, it announced a partnership with a dozen major exchanges to create a dialog about ways to improve transparency, accountability, and disclosure in the market. The first exchanges to sign up for this Data Accountability & Transparency Alliance (DATA) are OKEx, Huobi, Liquid, UpBit, IDEX, OceanEX, Gate.io, KuCoin, HitBTC, Binance, Bittrex, and Bitfinex. Only the last three were on Bitwise’s list of honest exchanges.
DATA members have agreed to provide substantially more data, which will probably include hot/cold wallet addresses and historical data, as well as live market-pair trading status and live wallet status. While this will not be required of other exchanges, they will be encouraged to go along.
Beyond that, CoinMarkerCap intends to provide channels that will let exchanges voluntarily provide data in dozens of other categories.