In a desire to shed more light on the notoriously opaque crypto industry, some crypto firms are teaming up to improve the market's reputation.

One group, the Virtual Commodity Association working group, aims to set up a self-regulatory group for the crypto industry. But its practicality has been questioned by law experts for a number of reasons.

Interest among big Wall Street firms in the cryptocurrency market is growing, but the nascent industry is still plagued by fraud and fettered by regulatory uncertainty. In the second quarter of 2018, investors lost $670 million in cryptocurrencies in hacks and scams.

In response, a number of cryptocurrency firms are teaming up to try and to repair the industry's image and push for regulatory clarifications.

Two new groups have emerged in recent weeks in an attempt to make their voices heard and to shine more light into the notoriously opaque and volatile market.

One, called the Virtual Commodity Association (VCA) working group, aimed to set up the industry's first self-regulatory organization and was launched by the Winklevoss brothers' Gemini exchange, Bitstamp, bitFlyer USA, and Bittrex in August.

In the absence of regulatory oversight, crypto exchanges are looking for ways to self-regulate the industry to make themselves more attractive to institutional investors. Lack of transparency and lack of safeguards in the crypto market is also cited as a reason why the SEC hasn't yet approved a bitcoin ETF.

Many big Wall Street funds have been loath to enter the crypto market because of the potential for hacks and fraud.

But while some market observers say that the establishment of the Virtual Commodity Association is a necessary step for the nascent crypto market to mature, skeptics say it likely won't accomplish much.

Joseph Moreno, a partner in Cadwalader's White Collar Defense and Investigations Group, said the idea of a self-regulatory organization — like the Gemini-led venture — may not be very effective.

"There's no teeth in an SRO if there's not a regulatory body behind it," he said. "It doesn't look to be very effective without statutory authority."

Moreno contrasted the self-regulating nature of the Virtual Commodity Association with that of the Financial Industry Regulatory Authority, another self-governing body which is authorized by Congress and supervised by the Securities and Exchange Commission.

"Presumably, [the VCA] will set standards and have the power to eject members if they violate them, but it will not have any governmental-like regulatory authority to bring enforcement actions or levy fines," he said.

The SRO proposed by the Gemini group will be governed by "a board of directors and capitalized by members," and it will "not operate any markets," "not be a trade association," will not provide regulatory programs for security tokens or security token platforms," as indicated by VCA on its website.

"I don’t know that self-regulating is exactly a recipe for avoiding problems, "said Phil Lookadoo, a regulatory and transaction partner at Haynes and Boone, LLP.

A spokesperson from the VCA could not be reached for comment, but Yusuf Hussain, Gemini's Head of Risk, said the group is working closely with a number of regulators to push forward the establishment of a crypto SRO, including equiping it with an enforcement arm.

In addition, not everyone in the crypto world may welcome a self-regulatory group, which goes against the concept of decentralization — a critical feature offered by blockchain technology.

"Part of the charm and fascination of blockchain is its ability to take out central intermediaries," Moreno said. "Within the community, there is a direct natural bias against centralization and giving power over to the central authority."

But Gemini's Hussain counters that even while blockchain technology is based on decentralization, people are using centralized exchanges like Gemini to purchase digital assets. This is a key reason to have an SRO, he said.

Another group, the Blockchain Association lobbying group, has a different mission. It's composed of crypto companies like Coinbase, Circle, Digital Currency Group, Polychain Capital, Protocol Labs, and Zcash, and works on topics like tax treatment of tokens and consumer protection.

These organizations are springing up as enforcement actions against crypto firms are starting to emerge.

In September, the SEC and the FINRA issued a string of actions against companies that have been involved with cryptocurrencies, in the first major attempts to regulate the industry.

The New York Attorney General office also published a report calling into question a set of practices undertaken by crypto exchanges, noting that a number of them failed to implement serious efforts to monitor and stop manipulative trading.