Gemini cryptocurrency exchange has put forward a proposal to set up a self-regulatory organization (SRO) for the U.S. virtual currency industry.

Referring to the CFTC’s order in which the regulator stated that virtual currencies fall under the definition of a “commodity,” Gemini pointed out that “virtual commodities like bitcoin…are “exempt commodities,” which is the same category in which the CFTC places metals and energy commodities, including gold, silver, oil, and natural gas.”

Gemini said that the purchase and sale of commodities in cash markets have been historically exempt from the CEA and CFTC jurisdiction as these transactions “are typically found to not be speculative in nature or readily susceptible to manipulation.” However, this is not the case with virtual commodities:

“Cash markets for virtual commodities, however, are unique in as much as: (a) the commercial use-cases for virtual commodities are still developing, (b) there is strong speculative interest, (c) these marketplaces involve a large number of individual participants, and (d) technology makes individual transaction costs exceptionally low (on a relative basis) as compared to other physical commodity spot markets.”

To that end, Gemini proposed setting up “Virtual Currency Association,” or VCA – an industry-sponsored self-regulatory organization for the U.S. virtual currency industry, specifically virtual commodity exchanges and custodians. The new body will be a non-profit, independent regulatory organization in compliance with global standards and best practices for SROs.

In a detailed blog post, Gemini has outlined the purpose, structure, and the primary functions of the VCA and its board.

The VCA would aim to foster financially sound, responsible, and innovative virtual commodity markets through a system of industry-sponsored standards, sound practices, and oversight. It would collaborate with regulators in order to detect and prevent manipulative and fraudulent acts and practices.

“We believe a thoughtful SRO framework that provides a virtual commodity regulatory program for the virtual commodity industry is the next logical step in the maturation of this market. We look forward to engaging with industry leaders, participants, regulators, and legislators on this proposal,” it concluded.