marcosantori
commented
6 years ago Nice. One of the weakest parts of the paper is the CFTC analysis. I think the conclusion is sound, but there is little in the way of support for it laid out in the paper. This is a step in the right direction. We could use a true overhaul.
SMickelsen
Footnote 73 from page 17 misapplies commodities law when it states "[t]hus, the SAFT transaction is probably not CFTC-regulated." All commodities transactions in interstate commerce are regulated by the CFTC through its antifraud and antimanipulation rules. Token transactions will probably all be in interstate commerce. The CFTC recently filed an enforcement action against a Bitcoin Ponzi scheme to invest in forward Bitcoin contracts. http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfgelfmancomplaint09212017.pdf
I recommend deleting the word "some" at the beginning of the footnote and restating the sentence highlighted above as follows "Forward Token transactions are subject to the CFTC's antifraud and antimanipulation rules. Token transactions which are transacted via swaps or futures agreements are subject to the CFTC's considerably more comprehensive swaps and futures regulatory regimes."
This is the original text: “The SAFT is an investment contract whereby investors purchase the right to receive tokens in the subsequent network launch. It exchanges Developers Inc.’s promise to deliver tokens upon the launch of the network for the investors’ promise to immediately pay. The SAFT is, at heart, a forward contract, but for tokens.[73]
[73] Some commodity forwards are regulated by the Commodity Futures Trade Commission (“CFTC”). For the purposes of this whitepaper, we rely on the CFTC’s position, recently set forth in the well-known Derivabit Order (available at http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfcoinfliprorder09172015.pdf) that virtual currencies are “exempt commodities.” Tokens probably fit within the CFTC’s definition of “virtual currency” set forth in that order, and the SAFT contemplates “physical delivery” of the tokens as CFTC has previously described the term. Thus, the SAFT transaction is probably not CFTC-regulated. We welcome further analysis by other commentators in the SAFT Project of the treatment of the SAFT under the Commodities Exchange Act and its implementing regulations.”