Ripple, the company behind the XRP token, says it expects XRP sales to be significantly lower in the short term for Q2 2019 compared with the previous quarter. The reason is commendable: Ripple plans to reassess its standards for reporting crypto volume and market data.
At first glance, reporting a lower Q2 might seem odd given improving market conditions that emerged toward the end of the quarter. Ripple’s explanation, however, is responsible: growing concerns over inaccurate volume reporting by exchanges have prompted the company to pause and review how it reports sales and market figures.
This move follows heightened scrutiny and criticism of how crypto exchanges report trading volumes. A recent report by crypto index and fund provider Bitwise found that roughly 95% of the volume reported on CoinMarketCap appears to be fake. In response, Ripple announced it will review and change its approach to reporting volume data in its Q2 XRP Markets Report, due in early July. The company will also examine how it discloses XRP sales on the open market.
Ripple intends to improve the reliability of market structure and reporting across global digital asset exchanges. Fake volumes are both worrying and harmful to the cryptocurrency ecosystem: they mislead investors about activity on various exchanges and can artificially inflate the apparent demand and value of certain coins.
The company outlined three concrete steps it is taking to analyze and revise its reporting standards:
- Actively collaborating with trusted partners to better understand the scope and scale of the problem.
- Reassessing its approach to reporting XRP volume, including reviewing new options and requirements for acquiring market data.
- Adopting a more conservative approach to reporting XRP sales for this quarter while gaining more insight into fake volume in the crypto industry.
Ripple acknowledged it has attempted to address inaccuracies in volume reporting and expects those distortions could affect its own Q2 forecast by as much as 50 percent. Programmatic sales of XRP, which primarily consist of selling XRP to crypto exchanges, accounted for $107.49 million in the company’s programmatic XRP sales during Q1 of this year.
“While we don’t claim to have a perfect solution, Ripple is taking steps to address these concerns and the related questions about the overall reliability of market structure and reporting at global digital asset exchanges. […] We are actively working with trusted partners in the field to better understand the scope and scale of the issue. We are evaluating our approach to reporting XRP volume, including reviewing new options and requirements for procuring market data.”
Ripple says the entire industry must rethink how it reports crypto trading volume to ensure the emerging space earns the trust of regulators, investors, and mainstream participants.
“We hope others in the crypto ecosystem will follow our lead, and ultimately that our joint efforts will create a growing level of trust among institutions and consumers so that the entire digital asset market can thrive. Until we do that, widespread adoption of digital assets and blockchain technology will remain unlikely.”
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