Editors Note: This article comes fromHoneycomb Finance NewsEditors Note: This article comes from
Honeycomb Finance News
(ID: fengchao-caijing), Author: Wu Xusheng, Editor: Hoho, reproduced by Odaily with authorization.
On August 1, BitMEX CEO Arthur Hayes (Arthur Hayes), who was suspected of being out of contact for several weeks due to the CFTC investigation, suddenly appeared. Posted a selfie in the jungle on his personal Twitter, with the text saying see you in September.
Hayes’ tweet did not mention any information about the investigation of BitMex, and many netizens speculated whether he had some unspeakable secrets before he chose to go to the mountains.
In fact, since July 19, foreign media Bloomberg has repeatedly reported that BitMex has been investigated by the CFTC (Commodity Futures Trading Commission). The core point of the investigation is whether BitMex illegally provides trading services to US users and large-scale money laundering.
The article pointed out that BitMex has been under investigation for several months.
Before the crisis, BitMex had been cautious about the US market. The person in charge of the platform once pointed out in a speech that since 2015, BitMex has banned trading services for US users.
However, this does not seem to dispel doubts about supervision. Judging from the number of visits to BitMex’s official website, the United States has long occupied the top 5 position in the source of website traffic list. Some people in the industry believe that it may not be easy for BitMex to escape from supervision this time.
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BitMex has no compliance qualification
BitMex’s distress this time is not unrelated to its failure to obtain compliance qualifications for a long time.
Under this situation, major exchanges have responded to the supervision of the United States. Binance issued an announcement a month ago stating that it does not provide services to any Americans. In addition, the old American exchanges Bittrex and Poloniex successively delisted a batch of Tokens in March and May of this year. The reason for delisting is to deal with possible compliance risks, and some tokens may continue to be delisted.
From this point of view, in recent months, the U.S. government regulators have not simply shouted a rectification slogan, but have adopted comprehensive restrictive and punitive measures, and do not intend to leave any room for negotiation for these disobedient trading platforms .
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Responsibilities of the three major financial regulators in the United States
Today, the U.S. regulators have initially formed a joint regulatory situation of FinCEN (Financial Crimes Enforcement Agency), SEC (SEC), and CFTC (Commodity Futures Trading Commission) for the blockchain digital asset industry. As well-known mainstream trading platforms, BitMex and Binance are undoubtedly on the investigation list.
FinCEN (Financial Crimes Enforcement Agency) is an agency under the U.S. Department of the Treasury. It released Application of FinCENs Regulations to Persons Administering, Exchange, or Using Virtual Currencies on March 18, 2013. Enterprises in the money service business must complete the Money Services Business (MSB for short) registration and perform corresponding compliance duties. The main responsibility of registered enterprises is to establish anti-money laundering procedures and reporting systems.
It is worth mentioning that BitMex is not on the registration list of FinCEN MSB.
The SEC (U.S. Securities Regulatory Commission) began to investigate the ICO project DAO in 2017, and cracked down on the issuance and trading of digital assets with securities properties. The SEC once emphasized in a statement, “If a trading platform is to provide trading services for encrypted digital assets that are identified as securities, the platform must complete registration with the SEC and obtain a securities trading platform license.
BitMex, headquartered in Hong Kong, has not obtained a license. However, the contract products BitMex provides to users in the US market are only a small number of trading varieties such as BTC and ETH. At present, it has not been strictly defined as securities. BitMex is not currently the focus of the SEC within the jurisdiction.
In the U.S. Act, BTC is defined as a commodity, and commodity futures are under the jurisdiction of the CFTC. In addition, on April 2 this year, U.S. congressmen Darren Soto and Ted Budd submitted two legislative supplements aimed at avoiding price manipulation of virtual currencies, and asked the U.S. Commodity Futures Trading Commission (CFCT) on how to take correct measures to prevent virtual currency Field price manipulation recommendations.
Since then, the CFCT has added a new regulatory function, that is, price manipulation and fraudulent behavior of digital assets in the US market. BitMex provides large-scale contract trading services to American users, and the maximum leverage reaches 100 times, and the platform has not obtained any license for commodity futures trading and clearing services, so it is natural to be investigated by the CFTC this time.
Trading volumes down as capital flees
As a result of investigations by U.S. regulators, trading volumes have declined and funds have fled. Since Bloomberg released the news that BitMex was being investigated by the CFTC on July 19, the number of users and user visits to the BitMex official website has continued to decline. Among them, the number of user visits has dropped by 11.57% from the previous month.
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The decline in user visits has directly caused the trading volume of BitMex to decline continuously for the past two weeks. Since July 10, the trading volume of BitMex has dropped from 7 billion US dollars to more than 2 billion US dollars.
At the same time, a large number of funds are also outflowing. The 24-hour BTC inflow/outflow data of the major exchanges of TokenAnalyst, an on-chain data analysis agency, shows that since July, the outflow of Bitcoin from the exchange has been greater than the inflow almost every day. On July 31, BitMex’s Bitcoin inflow was 1.105 million US dollars, while the outflow was as high as 3.89 million US dollars.
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BitMex trading volume has been declining since July
The flight of users, the loss of assets, and the shrinking transaction volume, all of the above factors may be related to the weak market rise since July.
On August 1, Arthur Hayes (Arthur Hayes), who had disappeared for weeks, suddenly reappeared. Posted a selfie in the jungle on his personal Twitter, with the text saying see you in September. Hayes’ tweet did not mention any information about the investigation of BitMex, and many netizens speculated whether he had some unspeakable secrets before he chose to go to the mountains.
As of 4:30 pm on August 1, BitMex’s trading volume was 2.7 billion yuan, an increase of about 400 million yuan from yesterday’s 2.3 billion yuan.
Before the distress, the person in charge of the BitMex platform pointed out in a speech that since 2015, BitMex has banned trading services for US users. However, this does not seem to dispel doubts about supervision. Judging from the number of visits to BitMex’s official website, the United States has long occupied the top 5 position in the source of website traffic list.
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Among BitMex users, US users rank top5
Increased supervision means that in order to provide trading services in the US market in the future, exchanges must obtain relevant qualifications and licenses.
The so-called qualification and license is the registration license of FinCENs Money Services Business (MSB for short), and the MTL Money Transmitter License (MTL for short) of each state.
In fact, the registration license cost of FinCEN’s MSB is not high. The main responsibility of the enterprises that have completed the registration license is to set up anti-money laundering procedures and reporting systems to facilitate FinCEN’s tracking of funds, so as to strengthen the control of crimes such as money laundering and terrorist financing.
In addition, if you provide trading services in New York State, you need to apply for a special license BitLicense from the New York State Department of Financial Services (NYSDFS).
Trading platforms that provide ICO token trading services need to complete the SEC securities trading platform license.
At present, it seems that it is still very difficult to obtain a securities trading license in the United States, which means that it is basically an impossible task for most exchanges in the short term. Therefore, a group of American trading platforms represented by Coinbase are extremely cautious in listing coins, and stay away from ICO tokens that have risks judged by the SEC as securities, and only provide a small number of relatively low-risk currency trading services such as BTC and ETH .
For a contract trading platform with futures attributes, it is necessary to apply to the CFTC for a license related to derivatives trading.
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The main license for derivatives trading under the CFTC
Among them, the designated contract market license DCM and the derivatives clearing organization license DCO are the two necessary basic licenses. After obtaining this license, the trading platform is eligible to provide BTC contract trading services to US users. However, if the contract transaction of ICO tokens with securities attributes is involved, SEC approval is still required.
The Bakkt trading platform under the Intercontinental Exchange ICE, which has recently entered the digital asset industry with a high profile, has already submitted a relevant license application to the CFTC, but it has not yet been approved.
