THE BIGGEST cryptocurrency traders are calling time on the horde of con artists and criminals that have flocked to their largely unregulated market.

Firms including DRW Holdings Inc.’s Cumberland crypto unit, Mike Novogratz’s Galaxy Digital Holdings and Ripple discussed creating a blacklist of counterparties known to renege on trades or engage in nefarious activities, at a gathering Tuesday in Chicago. An alternative suggestion was to establish an accreditation of firms in good standing as approved by a loose association of crypto businesses known as the Crypto OTC Roundtable Asia, or CORA.

While the decade-old crypto market has attracted top technologists and developers, as well as a flock of former Wall Street traders, it has also been a magnet for scammers and criminals. As if to make the point, at the same time as the crypto traders were meeting in Chicago, Binance, one of the world’s largest cryptocurrency exchanges, discovered hackers had stolen 7,000 Bitcoins worth about $40 million, which briefly sent the digital-token market down about 3%, before it recovered.

“A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors,” said Darius Sit, a Singapore-based managing partner at crypto trading firm QCP Capital, who helped organize the CORA meeting. “A self-governance initiative like this is also something that regulators are keen to see.”

Another suggestion at the Chicago gathering, which saw traders from 35 digital assets firms huddle in a monochrome conference room with black walls and no windows, was a common standard for verifying customer identities and source of funds. Further ideas included having CORA disseminate information on counterparties that have defaulted on derivatives trades.

CORA and the traders made no firm decisions on a blacklist or a whitelist and will discuss in further forums how to proceed with ideas raised at the event. The first CORA gathering took place in Singapore in January.

“The definition of a bad actor is elusive,” and there could be numerous idiosyncratic reasons, such as a processing error at a crypto bank, that could cause a counterparty to technically default on their obligations, said Vishal Shah, senior trader at Greenwich, Connecticut-based digital assets hedge fund Cipher Technologies Management LP, who attended the gathering. “Such occurrences are unique and frequent, making a standardized implementation of a blacklist tough. There is also the question of legality, and on the cover, it looks more sinister than its intent.”

The event, which drew traders from Singapore to San Francisco, highlighted the common will among the big players in crypto to impose standards from traditional finance on their immature market. It also made clear that there is much still to do to establish an ordered and trusted trading environment, especially in the over-the-counter derivatives contracts CORA is focused on.

The willingness of the trading firms to work together toward some common standards bodes well for the future, said Yoshi Nakamura, a senior member of Galaxy Digital’s trading team who was in Chicago on Tuesday. While progress is slow, CORA and initiatives like it help build bridges between crypto assets and mainstream finance, said Nakamura.

“It’s important to crawl, walk, jog and then run, and we are now off our knees and on to our feet,” said Nakamura. “It’s important to create the bridge and it’s important to keep working on it.” — Bloomberg