Bitfinex recently paid the CFTC $75,000 USD related to a settlement between the US federal government agency and the digital currency exchange. A copy of the CFTC order can be found here. Bitfinex explains it this way:
Today, the United States Commodity Futures Trading Commission (CFTC) issued an order instituting proceedings against BFXNA Inc. (BFXNA), an entity that conducts business with U.S. customers through the website www.bitfinex.com. In the order, the CFTC accepted BFXNA’s offer of settlement to resolve certain alleged violations of the U.S. Commodity Exchange Act (the Act). A copy of the order is here. In the order and settlement, the CFTC found that BFXNA violated sections 4(a) and 4d(a) of the Act. BFXNA neither admits nor denies the CFTC findings in the order and settlement.
Bitfinex proactively contacted the CFTC in September 2015—before the CFTC announced enforcement action involving bitcoin trading platforms—to provide information about Bitfinex related to a potential investigation. According to the order, “Bitfinex’s cooperation with the Commission’s investigation was significant … Bitfinex consistently responded to requests for information fully and quickly, both in writing and via oral presentations.”
In response to these constructive discussions with the CFTC’s Division of Enforcement, BFXNA has made significant changes to the way in which U.S. customers engage in financed trading on Bitfinex. Bitfinex remains committed to continually improving its customers’ experience while complying with applicable laws and regulatory requirements.
In closing, we are pleased to announce this settlement with the CFTC. The CFTC has engaged in a productive, open, and timely dialogue with us, and, as a result, we believe we have a better understanding of the regulatory framework governing financed trading on our platform. The Division of Enforcement has demonstrated that, while they will work diligently to enforce existing rules even as they apply them to new markets, they also are sensitive to innovation and development in sectors that the CFTC regulates.
We look forward to providing best-in-class service to U.S. customers. We will continually work to make our customers’ experience safer and better.
This comes as no surprise to bitcoin investors. We are used to dealing with mountains of arbitrary regulations from governments around the world. The CFTC is aggressively defending its regulatory powers in the United States. I just hope that instead of forcing exchanges like Bitfinex to shut down, the CFTC can find a way to create a regulatory environment where new ideas and technological innovation can flourish. I’m looking forward to this fall when the CME bitcoin index experiment might lead the way to a regulated US based exchange offering bitcoin derivatives.
The editorial linked below spells out the main issues of this case and gives market participants a good idea of what to expect next. Market participants should be watching other exchanges that offer leveraged bitcoin trading in the US such as Huobi/BitVC to see how they are able to adapt to the changing regulatory environment.
Why the CFTC Bitfinex Enforcement Actually Benefits Bitcoin Exchanges – CoinDesk
Kevin Batteh is currently a partner with Delta Strategy Group, the leading government affairs firm in the derivatives and blockchain industries. He is also an advisor to the Chamber of Digital Commerce, the world’s largest trade association representing the digital asset and blockchain industry.
