Comment Text:
Will the CFTC take additional steps to prevent third-party exchanges of virtual currencies from placing investor commodities in a wallet or account to which the third-party exchange has no access?
As with Bitfinex, the exchange entity was considered a futures market because complete control of the commodities were not given to investors within 28 days of the initial transaction. Stated differently, because Bitfinex did not relinquish access keys to wallets containing investor currency, the CFTC found that Bitfinex did not “actually deliver” the commodities to investors.
There are dire implications if third-party exchanges stand adamant against CFTC registration requirements. One way to avoid registration is to relinquish access to the virtual wallets holding investor commodities, and thus trigger the “actual delivery” exception to registration requirements. In doing so, exchanges will also relinquish safety protocols to prevent or stop suspicious transactions from occurring. If the CFTC considers this a viable option for unregistered exchanges, what additional steps can be taken to prevent this unsecured form of “actual delivery”?
