How does CONSTI enable compliance for business users?

Crypto compliance is a broad and evolving topic covering many different areas in an organization, also depending on the jurisdiction, type, and location of your business. When someone is referring to compliance in the field of crypto price feeds and the financial industry, you are usually talking about institutional investors or professional investors who need to document that the prices used meet business, technical, regulatory, legal, tax, or client reporting requirements.

Reliable Market Data

Accessing reliable market data about cryptocurrencies is important if you are bound to reporting demands or compliance requirements, if you want to achieve such compliance voluntarily, or if you are often looking for a way to address market conformity checks, demonstrate best price execution, or if you want to avoid market abuse.

In traditional finance, market data is compliant by default, as the sources of data are highly regulated and supervised (exchanges, market places, and execution venues). But also the professional market participants (banks, brokers, asset managers, issuers, etc.) need to ensure in traditional finance, that the market data usage is compliant.

In crypto, this is different as of 2024. You typically do not have explicit provisions on the compliance of market data or its providers. Nevertheless, there is usually the need from most professional investors or institutions to only use "reliable" market data, which is a broad term.

In most jurisdictions, reliable crypto market data is needed for trading decisions, portfolio valuation, tax reporting, risk management, and related regulated tasks and requirements. Often, several authorities are involved here and affect one and the same company. This will often result in different demands of the front office, middle office, and back office, in regards to the data provider.

Compliant Market Data

In crypto, the data origination side is not regulated, but the data consumption side may be for your organization. Preparing crypto price feeds for professional investors and digital asset price data for financial institutions is more challenging than you might think. That's why the compliant features are deeply built into the offerings.

CONSTI is comprehensively helping users to achieve compliance across all fronts with the aim of providing bank-grade services in anticipation of the upcoming regulation in the crypto market. This commitment extends beyond presenting relevant documents to users or by confirming that the infrastructure is managed according to best  practices. The compliance features are built deep into the underlying technology. Users will also get the relevant compliance documentations for reporting purposes, and everything can be confirmed by you or an external auditor.

CONSTI is supporting compliance of its users through a number of activities:

• Governance: The management of the price feeds is highly organized and controlled.
• Data methodologies: Each price feed has its specific calculation characteristics, quality controls, and versioning.
• Plausibility policy: Implementation of the outlier management, depegging protection for stablecoins to avoid price anomalies, detection of stale prices, elimination of zero prices, price dispertion across multiple sources, comparison of current pricing against the pricing of yesterday or the days before, consideration of historical volatilities (dynamic tolerance limits).
• Data auditing policy: An audit trail is provided to the user for every price feed used. Input values of the price creation, the exchanges used, the base currencies, quote currencies, exchange rates, calculation algorithm, outliers, and calculated prices are always saved together with a timestamp. These details can be confirmed afterwards using the immutable checksum accompanying every price and can be confirmed this way by an external auditor.
• Conflict of interest policy: Four eyes principle and data cannot be manipulated at the source or during the transmission to the end user.
• End user compliance: Certain users need or want to follow requirements for price aggregation. Such documents are made available to the users.
• Technical compliance: Publication of documents certifying that the IT infrastructure and cloud data center used is following SOC I, SOC II, and ISO 27001 standards.
• IOSCO compliance: Demonstrating best practices and availability of policies of being a crypto price reporting agency.
• Highest coding standards: The code is entirely designed and engineered in Germany for business users. Using bullet-proof and highly available cloud infrastructure hosted in Germany.

All documents and features enabling the compliance are by default published in the compliance center for every CONSTI customer.

Price Calculation Transparency

The price calculation transparency optionally shows how every reported price in a CONSTI price feed came into being, no matter if it is reported live or delayed. The calculation transparency is vital for anyone who is demanding the highest available quality when dealing with crypto assets. A fundament for building trust, ensuring compliance with regulations, mitigating risks, and empowering clients to make informed financial decisions.

Pro feature: Calculation transparency

Immutable Checksums

The immutable checksums optionally enable you to verify the integrity of delivered prices by cross-referencing them with their unique checksums included with every reported price delivered to you, no matter if real-time or historic. This feature programmatically ensures that sources, prices, and methodologies remain unchanged and authentic throughout transmission and storage processes, bolstering confidence in the accuracy of market data.

Pro feature: Immutable checksums

Ready For Audits

Often, users require accurate and reliable records of their crypto trading or holding activities, including digital asset market data used for decision-making, trade execution, or conformity checks. As a user of the professional crypto price feeds, you can demonstrate auditing compliance with standards and provide transparent documentation in the event of inquiries or audits.

Pro feature: Auditor access