On October 15, the Commodity Futures Trading Commission (CFTC) fined the cryptocurrency companies Tether and Bitfinex a total of $ 41 million and $ 1.5 million, respectively, for violating the Commodity Exchange Act (CEA) and a previous CFTC order.
The regulator found that Tether, the company behind the eponymous stack coin, only had enough legal reserves to support fixed assets denominated in dollars 27.6% of the time during the 26-month period from 2016 to 2018. The agency also reported that Tether broke the law by to hold some of its reserves in non-cash financial instruments, and by mixing operating and reserve funds.
At the same time, Commodity Futures Watchdog has approved accusations with Bitfinex to facilitate “illegal OTC retail transactions with digital assets with US citizens” on its platform, in addition to acting “as a seller of futures commissions, or FCM, without registering as the is “wanted”.
In a simultaneous statement, CFTC Commissioner Don Stump supported the measure, also expressing concern that the settlement could “create a false sense of comfort for stablecoin users”, as they may erroneously conclude that the CFTC regulates and controls stablecoins and their issuers.
While the CFTC has used a broad definition of “commodity” on stablecoins in their current state, Stump has distanced the commission from regulating this asset class and “analyzes the business of those issuing” stablecoins on a daily basis.
Tether issued a statement disproving it, insisting that it always has “sufficient reserves.” The company attributed its decision to the settlement by its willingness to “address this issue to move forward and focus on the future.”