By Richard Hill
The CFTC has been venturing into making policy about financial technology through enforcement actions rather than traditional rulemaking, Commissioner Brian Quintenz said Oct. 19.
“From a public-policy perspective, I think we should be providing rules before we should be enforcing the lack of rules,” he said at a Georgetown University Fintech Week gathering. Quintenz, a commissioner since August, told Bloomberg Law after his remarks that he was referring to a settled 2016 enforcement action in which the agency sanctioned Bitfinex, a digital token market, for failing to deliver bitcoins within a required time frame, even though the agency didn’t have a clear policy as to when delivery of a virtual commodity occurs.
Under the Commodity Exchange Act, if a seller delivers a physical commodity such as wheat within 28 days of the purchase, it doesn’t have to register as a futures broker with the Commodity Futures Trading Commission. Virtual commodities such as bitcoin, which are transferred digitally, open up new questions as to when delivery to a buyer actually occurs. In the Bitfinex case, the CFTC said that because the unregistered Hong Kong-based exchange didn’t “deliver” the bitcoins within 28 days, it was offering illegal, off-exchange, retail futures contracts.In the past, the CFTC has been criticized for what market participants call “backdoor rulemaking”—rulemaking through enforcement or the no-action process—because it denies them the opportunity to weigh in on new policies through administrative notice and comment procedures. Quintenz could be in a position to curtail the practice going forward, both as one of three Republican commissioners and sponsor of the agency’s Technology Advisory Committee, which advises the commission on the appropriate legislative and regulatory response to increasing use of technology in the markets.
At the Georgetown gathering, Quintenz said he hopes to have a meeting of the committee by the end of the year. Under his sponsorship, the TAC will focus on the modern trading environment, cybersecurity, distributed ledger technology such as blockchain, and interacting with fintech innovators. Speaking alongside Quintenz at the event, Securities and Exchange Commissioner Kara Stein said her agency “basically has to be out there on the edge with technology, embracing it.” She added later in her remarks, “instead of being disruptive, let’s surf the wave with everyone else.”
To contact the reporter on this story: Richard Hill in Washington at email@example.com
To contact the editor responsible for this story: Phyllis Diamond at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)