Despite the looming shadow of regulations that's quickly encircling the cryptocurrency arena, market participants remain divided on the roles the SEC and other regulators should play in determining the industry's future.

While some observers believe it is only natural for the SEC to play a central part, others in the sector are taking matters into their own hands. Led by some of the most recognized names and organizations in the industry, one group, the Virtual Commodity Association, has taken concrete steps to create a self-regulatory body that would set standards and enforce them. This new group, being led by the Winklevoss twins, BitStamp, Bitflyer USA and Bittrex, is already set to meet in late September to lay the foundations of the organization.

The inaugural meeting will be held against a backdrop of significant price weakness in cryptocurrencies -- and particularly in Ether, which has accelerated its decline relative to Bitcoin's price action so far in 2018. While Bitcoin has found support around the $6,200 mark since June -- and is still up nearly 50% over the last year -- Ether is down 40% over the last year as it broke below the $200 level only in the last month.

Unlike the case for Bitcoin, a number of high-profile blockchain technology companies have raised money through Ether over the last year. As technology development needs at those companies cause them to burn through cash, many of those companies have sold Ether, weighing on the price.

For their part, the Winklevoss twins have become bigger players in the crypto sphere with the founding of their licensed digital-assets exchange called Gemini, as well as through their proposed Bitcoin ETF, which was rejected earlier this year by the SEC. The other groups are some of the largest exchanges and constitute a significant portion of the trading volume in cryptocurrencies in both the U.S. and abroad.

The Virtual Commodity Association aims to create industry standards, liaise with regulators (including both the SEC and the US's Commodity Futures Trading Commission) and promote greater transparency across the sector. The group's goal is to avoid the heaviest hammer of regulation by showing governments and agencies that the sector is willing to play ball.

Beyond that is likely the hope that showing a real commitment to regulation will be enough to shift the SEC's prevailing sentiment on Bitcoin ETFs, all of which have been rejected until now.

Adam Efrima, the co-founder of Blox.io, a crypto markets analysis firm, noted that "many investors and traders believe that the Bitcoin ETF is the necessary trigger for the next bull-run in the crypto markets." To him, even with the risks and issues involved, the new asset would present a major step "in the greater goal of mass adoption of blockchain technologies by the general public and even more so by major industries and companies."

The VCA will focus most of its early efforts on monitoring the trading of cryptocurrency, hoping to create greater accountability and increase overall security. Thus far, the group has not set a solid roadmap for the long term, but it will host an inaugural meeting in September to establish the ground rules and outline a more defined plan for the future.

Even so, not everyone supports the idea of self-regulation. Security token marketing firm CrowdfundX CEO Darren Marble observed that "when you have unregulated markets it clearly draws the worst of the worst into the playing field and unregulated markets are like red meat and blood to scammers, hack artists, and scammers. They just can't help themselves." In Marble's mind, organizations such as VCA are not as useful as actual industry or governmental regulations would be, and generally don't work out. There won't be "a future where these markets suddenly work themselves out globally," Marble said.

Regardless of how the meeting between these major players pans out, the reality is that the crypto sector is in dire need of more rigorous structure. As investors continue to flock to enter the market and stories of major scams and fraud continue to emerge, the industry is headed for a major crossroads.

In the end, it will be vital for the sector to find the right balance between governmental oversight and crypto's ability to truly police itself.

The author holds stock in investment holding company, Leucadia, and is a partner in an emerging technology marketing firm, Notability Partners. He holds no positions in cryptocurrencies nor in any companies that invest in them.