18 Sep Comments regarding the CFTC
We want to address the rumor circulating regarding the U.S. Commodity Futures Trading Commission (CFTC) inquiries about our business operations and the potential implications of the CFTC’s order regarding Coinflip, Inc.
First, as of this posting, we have not been contacted by the CFTC and have, in fact, proactively reached out to them. We are happy to discuss our platform and business operations with any interested regulator.
Second, there appears to be some concern that the ‘swap’ nature of our trading platform puts us within the CFTC’s jurisdiction with respect to our U.S. customers. This may be true if Bitfinex were actually a swaps or derivatives trading platform. In point of fact, Bitfinex is not a swaps trading platform. The ‘swap’ terminology was used in the early days of Bitfinex when we didn’t fully consider the implications of using that word. Bitfinex is an integrated exchange and margin trading platform with margin liquidity being sourced on a peer-to-peer basis. Furthermore, because margin positions can also be ‘claimed’, they should not be construed as another kind of non-deliverable derivative product. We have been considering a site-wide change of terminology to more closely reflect our actual product offering. Clearly, the time has come for us to prioritize those refinements; expect to start seeing these changes on our site very soon.
Finally, insofar as the CFTC is claiming jurisdiction over the spot trading of digital currencies, it may be that all bitcoin exchanges, domestic and foreign, serving U.S. customers are equally affected. The exchange industry as a whole should seek further clarification from the CFTC on the regulatory implications of their ‘bitcoin is a commodity’ assertion. If the CFTC is offering a comprehensive and uniform solution for bitcoin exchange regulation in the U.S., then we welcome that development and would look to comply along with the rest of the exchange industry. If, however, it represents yet another layer of compliance on top of existing and emerging state and federal rules and regulations, then we believe that the industry’s cost of doing business with U.S. customers will continue to increase, stifling innovation and competition in what is still a fledgling industry. It is possible that neither of these interpretations is correct. Further clarification is required.
In any case, our customers may rest assured that Bitfinex is being proactive in educating regulators on the nature of our platform and operations. We have co-operated with international and domestic regulators and law enforcement—and we continue to do so—where our assistance is required. We proactively continue to implement best practices to benefit our customers, borrowing from various regulatory regimes around the world. Consequently, we do not expect any interruption in our margin trading operations for our U.S. customers.