Being a successful FinTech firm requires more than just great technology; it also requires an understanding of the laws and regulations applicable to your business. This course will provide you with that understanding. You will learn about the critical legal, regulatory, and policy issues associated with cryptocurrencies, initial coin offerings, online lending, new payments and wealth management technologies, and financial account aggregators. In addition, you will learn how regulatory agencies in the U.S. are continually adjusting to the emergence of new financial technologies and how one specific agency has proposed a path for FinTech firms to become regulated banks. You will also learn the basics of how banks are regulated in the U.S. If you are unfamiliar with how these new financial technologies work, fear not. We will begin each new course section with a high-level overview of the underlying technology. While the course is principally focused on the U.S. FinTech industry, we cannot possibly cover every relevant legal and regulatory issue. Therefore, this course should not be construed as legal advice. Rather, the goal of the course is to familiarize you with the key legal and regulatory challenges FinTech firms in various sectors face, as well as the critical policy debates that are occurring in Washington D.C. and state capitals across the country.
Regulating Cryptocurrency as a Commodity
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来自 Duke University 的课程
FinTech Law and Policy
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从本节课中
Cryptocurrency and Initial Coin Offerings
This module first provides an overview of cryptocurrencies and distributed ledger technology, and then examines how cryptocurrency is regulated by various state and federal agencies. You will also learn how cryptocurrency is regulated as: money, a commodity, and property. The module concludes with an examination of initial coin offerings and their regulatory treatment.
与讲师见面
Lee Reiners, CFAExecutive Director, Global Financial Markets Center
Duke University School of Law
In the previous lecture,
we explored the regulations applicable to cryptocurrency when it is regarded as money.
But cryptocurrency can fulfill other roles as well.
In this lecture, we will examine how cryptocurrency is also regulated as a commodity,
and the potential for cryptocurrency to be regulated as a security.
The Commodity Futures Trading Commission or CFTC,
is the agency responsible for overseeing US commodities markets.
Specifically, the CFTC aims to protect market users and their funds,
consumers and the public from fraud, manipulation,
and abusive practices related to derivatives and
other products that are subject to the commodity exchange act.
In 2015, the CFTC classified bitcoin
and by extension other virtual currencies as a commodity,
in an order against coin flip incorporated.
This order stated that bitcoin and other virtual currencies,
fall under the definition of a commodity,
according to the commodity exchange act of 1936.
As a result of this order,
virtual currencies are now considered an exempt commodity which is
the same category at the CFTC places metals and energies commodities including gold,
silver, oil, and natural gas.
The CFTC has jurisdiction over futures and
other derivatives involving these exempt commodities.
But the cash markets also referred to as the spot markets for these commodities,
do not fall under the jurisdiction of the CFTC.
However, the CFTC does have fraud and
manipulation enforcement jurisdiction over these markets and market participants.
Because the CFTC considers cryptocurrency to be a commodity,
and they do not regulate commodity spot markets,
online exchanges like coinbase do not need to register with the CFTC.
However, any business involved in virtual currency derivatives
including foreign businesses that solicit or provide services to US customers,
will most likely have to register with the CFTC.
In addition, if any entity offers a commodity such as
bitcoin for sale to a retail customer on a margin, leveraged,
or finance basis in other words with borrowed funds,
then the agreement is regulated as if it were a futures transaction,
unless the commodity is actually delivered to the buyer within 28 days.
This brings us to bitcoin futures contracts,
which began trading in December of 2017,
on the Chicago Board Options Exchange and the Chicago Mercantile Exchange.
Both of these exchanges were able to list
unique bitcoin futures contracts after going through the CFTC self-certification process.
Whereby the exchange verifies that a new contract
complies with the commodity exchange act in CFTC regulations.
Provided the CFTC does not object to the findings of the self- certification,
exchanges able to list a new product one day after submitting the self-certification.
The introduction of bitcoin futures was controversial,
with many arguing that the CFTC should have
intervened to halt the self-certification on the grounds that
futures prices can be manipulated because bitcoin
is a lightly traded compared to traditional asset classes.
The CFTC argues there was little they could do because
the exchanges met all applicable requirements for self- certification.
In addition, the CFTC believes
bitcoin futures contracts will give them greater visibility into bitcoin spot markets.
Which they do have the authority to police for fraud and manipulation.
Regardless, the introduction of
bitcoin futures contracts was a pivotal moment in the history of cryptocurrency.
For the first time, investors had access to a regulated and liquid instrument,
that allowed them to bet on the future price of bitcoin
without having to go through the process of purchasing actual bitcoin.
Because the CFTC classifies virtual currency as a commodity,
this means that it cannot also be a security,
subject to Securities and Exchange Commission or SEC, rules, and regulations.
However, any sort of investment vehicle that holds
virtual currency and offers ownership interests in the vehicle,
will be considered a security,
subject to SEC registration unless it meets SEC exemption requirements.
This is why the SEC must sign off before any sort of
bitcoin or other virtual currency exchange traded fund can enter the market.
Exchange traded funds, commonly referred to as ETFs,
are simply marketable securities that track an index,
a commodity, bonds, or basket of assets like an index one.
Unlike mutual funds, an ETF trades like a common stock on a stock exchange.
In 2017, the SEC rejected a bid by bitcoin investors
Cameron and Tyler Winklevoss to list an ETF tied to the price of bitcoin.
The SEC's main concern was unregulated nature of
bitcoin spot markets made the ETF susceptible to fraud manipulation.
After bitcoin futures came to market,
the SEC received a flood of
new ETF applications that all proposed to track the price of bitcoin futures.
Once again, the SEC rejected these proposals due to
concerns over the potential for fraud and manipulation in the bitcoin spot market.
However, the SEC went a step further and listed a series of questions that must be
satisfactorily answered by the ETF sponsor
before the agency will authorize a virtual currency related ETF.
First, will investment funds have the information necessary to adequately
value cryptocurrencies or cryptocurrency related products given their volatility,
the fragmentation, and general lack of regulation underlying cryptocurrency markets,
and the nascent state and current trading volume in the cryptocurrency futures markets?
Second, what steps would firms investing in cryptocurrencies or
cryptocurrency related products take to ensure that they would
have sufficiently liquid assets to meet redemptions daily?
Third, to the extent the fund plans the whole cryptocurrency directly,
how would it satisfy requirements to properly safeguard these assets?
The SEC made clear that until these questions can be satisfactorily answered,
it would be inappropriate for funds sponsors to initiate registration of
funds than intend to invest substantially in cryptocurrency and related products.
Thus, it appears as though there will be
no cryptocurrency-related exchange traded fund anytime soon.
Because much of the SEC's concerns revolve around
the fact that cryptocurrency spot markets are unregulated,
some within the cryptocurrency community have called on the industry to police itself.
To this end, Tyler and
Cameron Winklevoss who run the Gemini exchange for trading bitcoin and ether,
have submitted a proposal to create the virtual commodity association.
A self-regulatory organization meant to police digital currency markets and custodians.
The virtual commodity association would be
a nonprofit group with the aim to develop industry standards,
promote transparency, and work with regulators including the CFTC to prevent fraud.
Well, self-regulatory organizations exist in other industries,
most notably, the financial industry regulatory authority for the securities industry,
the Winklevoss proposal is unlikely to gain much traction due to the fragmented nature of
the cryptocurrency industry and
the industries historical aversion to any kind of central authority.
