As part of its recently-announced commitment to increased transparency, CoinMarketCap has announced sweeping changes to the way it ranks trading platforms and cryptocurrencies on its website.
The changes directly require that exchanges and projects provide verifiable data, if they wish to remain listed on the CoinMarketCap website. CMC is one of the top 400 websites in the world with over 130M views per month, according to Alexa traffic ranking – outranking business leviathans such as CNBC and the Wall Street Journal.
But as questions have arisen over practices like wash trading and false reporting, CoinMarketCap has had to change the rules to prevent bad actors from gaming the system – the result is the Data Accountability & Transparency Alliance (DATA), a group of 24 companies dedicated to providing more accurate and trustworthy information in the cryptocurrency industry.
In the interests of full disclosure, Crypto Briefing is the first news media member of the DATA Alliance, given that DATA’s goals align so closely with our own.
CMC describes the mission of the DATA Alliance as to “empower our users to make more informed decisions, and provide a means for projects to differentiate themselves through enhanced disclosures.”
There are two sets of changes, one for exchange rankings and one covering all listings.
The trade aggregator site is the go-to resource for many in the cryptocurrency world, meaning that market participants will be bound to comply with the new requirements, given the potential lack of visibility if they don’t.
Mandatory Data Collection for Exchange Listings
Following the DATA announcement on May 1, crypto exchanges were issued with mandatory data collection requests. These included live trading and order book data; and they were given 45 days to respond. CoinMarketCap confirmed today that over 70 percent of exchanges had complied.
Following the change, exchanges that haven’t complied with the data request will now be listed ranked below those that did. Effectively, exchanges that aren’t able, or willing, to disclose their order books will be penalized. Furthermore, their stats will be excluded from CoinMarketCap’s volume-weighted average price and adjusted order volume completely.
Latecomers aren’t excluded. If any exchange still wants to submit it’s data, it will be included retroactively in all relevant CoinMarketCap rankings and calculations.
Carylyne Chan, Head of Marketing at CMC, noted that the company’s support desk had been “slammed” by exchanges seeking to comply with the new requirements in the 24 hours since the deadline passed.
Coin Listings Are Also Affected
CoinMarketCap has also introduced new criteria for listings that cover both project tokens and exchanges. These criteria are considerably more detailed than those previously available, covering trading volume, community interest, and time in the market.
The CoinMarketCap website will now contain an additional category for “Untracked Listings” which contains projects that don’t meet the minimum criteria to achieve a full listing.
In a further step, the company has also published its policy for delisting. Projects will be delisted for unlawful activities, suspicious trading activities, or cessation of business, among others.
Chan is hopeful that “the new and detailed criteria for listings will provide clear and concrete guidelines for everyone looking to be listed on CoinMarketCap.”
What the CoinMarketCap Changes Mean
Given that many of the big exchanges including Binance, Bittrex, and Huobi are already members of DATA, we can safely assume they’ve submitted their mandatory data. However, it’s possible that we may see a few changes among the higher-ranking exchanges, as some are in the minority that have not complied.
Earlier this year, when reports emerged that up to 95 percent of reported exchange volume was faked, Chan confirmed the concerns as “valid” and stated the CoinMarketCap’s commitment to data transparency.
The first discussions among the DATA group are upcoming – and some of the topics under the microscope will include standardization of definitions, tickers, and data disclosures via API, as well as confirming DATA Phase 2 metrics to be collected. CoinMarketCap will also soon issue a note on the methodologies employed for calculating circulating supply, according to Chan.
The crypto space is far from centralized – but there are a few big players that hold a lot of clout, and CoinMarketCap is one of them. Anything that can increase trust in our sector and data transparency throughout the crypto space is a net positive for all participants.
Now, if only there were a way to persuade Facebook of the virtues of transparency…