Crypto exchange Bitvavo adds Nasdaq’s surveillance tool to detect market abuse

Dutch cryptocurrency exchange Bitvavo has partnered with Nasdaq to monitor the markets for signs of illegal activity.

EU-regulated cryptocurrency exchange Bitvavo said in a press release today, July 31, that it will use the Nasdaq Market Surveillance tool to detect and investigate “suspected market abuse.”

Under the agreement, the Amsterdam-based cryptocurrency exchange plans to “obtain order book replays” with a “unified audit trail” across multiple listed assets, as well as gain trading insights and visualizations and query “suspicious activity through a wide range of alerts.” The exchange also plans to use the tool to generate reports that it will share with relevant regulators.

Commenting on the partnership, Tony Sio, Nasdaq’s head of regulatory strategy and innovation, noted that the crypto market faces “significant challenges” if it wants to achieve the level of investor protection and market confidence of traditional markets. Referring to local EU regulations, Sio said:

“Our market surveillance technology can play a powerful role in enhancing the integrity of digital asset exchanges and help achieve many of the objectives of the new MiCA regulation.

The partnership is clearly aimed at overcoming the challenges outlined and aligning with the EU’s recently launched Crypto Asset Markets Regulation (also known as MiCA). As stated in the press release, this regulation imposes “strict rules and requirements” on crypto exchanges to detect and report market abuse, similar to the standards applied to traditional financial markets.

Founded in 2018 by Jelle de Boer and Tim Baardse, Bitvavo has regulatory approval from the Dutch Central Bank to operate as a digital asset services provider.

In December 2022, Bitvavo revealed that around €280 million of its funds were stuck in Digital Currency Group, the parent company of Grayscale, Foundry, and Lun, which found itself in dire straits following the FTX crash. The exchange later stated that it expects to recover at least 80% of the trapped funds from DCG following a deal with the American crypto firm.