The solutions developed by Solidus Labs will use machine learning to read factors such as trading behaviors and market conditions to detect activities that must be reviewed.
This will help in keeping a check on illegal trading activities such as wash-trading, spoofing, pump-and-dump, etc.
Prior to two months, Tokenize Xchange became one of the three Malaysian digital asset exchanges to receive full approval from its national regulator- the Securities Commission of Malaysia.
Asaf Meir, CEO of Solidus Labs says that external surveillance tools are going to be a critical system for exchanges looking to grow.
Meir adds that many jurisdictions like Hong Kong and Malaysia have already clarified that exchanges need an external market surveillance provider to achieve a license:
“Regulators worldwide are working on similar frameworks, and we anticipate that soon surveillance will be required to operate almost anywhere, definitely in a regulated manner.”
Meir also noted that “exchanges that take serious steps towards market integrity are the ones that get institutional clients.”
Meir explained that there are always challenges with integrating market surveillance systems into exchanges:
“Crypto and digital assets introduce fundamentally different market structures, data structures, regulatory reality and new forms of crypto-specific market manipulation threats.”
Consequently, integration becomes not only a very complex process but also an expensive one. That why many exchanges don’t find the idea of integrating market surveillance system very appealing, according to Meir.
Due to the rise in illicit activities in the digital asset industry and regulators consistently pressuring exchanges to improve their security systems.
Better regulations and surveillance tools to moderate crypto exchanges and trading activities helps achieve this.