During the 26-month period, from 2016 to 2018, the regulator determined that Tether, the company behind an eponymous stablecoin, only had adequate cash reserves to support a dollar-pegged asset 27% of the time.
Aside from the non-fiat financial products, the agency found that Tether combined operating and reserve money, which violated the law. At the same time, the commodity futures regulator resolved complaints against Bitfinex for enabling “illegal, off-exchange retail commodity trades in cryptoassets with US residents” on its platform, as well as for acting as an unregistered futures commission merchant (FCM).
Commissioner Dawn Stump of the Commodity Futures Trading Commission (CFTC) agreed with the settlement, but expressed worry that it may “give consumers of stablecoins with a false feeling of security” by leading them to believe that the CFTC controls and supervises stablecoin issuers. But although in this instance the CFTC has defined stablecoins as commodities, Stump distanced the Commission from regulating these assets and having “daily insight” into those who create and distribute “stablecoins.”
According to the company’s response, it “always kept sufficient reserves.” As a result of its desire to “resolve this issue in order to move ahead and concentrate on the future,” the company decided to settle.
Title: CFTC Fines Tether & Bitfinex a Total of $42.5mln for Violations of Federal Commodities Laws.