*This article originally appeared in the FinTech Law Report, Volume 19, Issue 2 for March/April 2016.
On November 18, 2015, the Federal Trade Commission (FTC) issued final amendments to the Telemarketing Sales Rule (TSR) banning payment methods that the FTC believes are disproportionately used by scammers (Final Rule). The Final Rule was published in the Federal Register on December 14, 2015.
This Article originally appeared in the Thomson Reuters FinTech Law Report, Volume 18, Issue 6 (2016).
On September 17, 2015, the Commodity Futures Trading Commission (“CFTC”) issued an order (“Coinflip Order”) settling charges brought against Coinflip, Inc., the operator of an online trading platform that facilitated the trading of derivatives on Bitcoin and other digital currencies, also referred to by the CFTC and other regulators as “virtual currencies” (“Bitcoin Derivatives”), including U.S. dollar cash-settled options. The CFTC found that Coinflip, Inc. had violated the Commodity Exchange Act (“CEA”) and CFTC rules by failing to register as a swap execution facility (“SEF”) or designated contract market (“DCM”). The direct impact of the Coinflip Order is minimal, as the platform itself had already shut down due to lack of volume. However, the Coinflip Order represents a watershed in the development of virtual currencies, as it is the first time that the CFTC has affirmatively asserted that Bitcoin and other virtual currencies are “properly defined as commodities” and that the CFTC has jurisdiction over Bitcoin Derivatives.
On April 7, 2016, the Securities and Exchange Commission (SEC) approved a proposed rule change by the Financial Industry Regulatory Authority (FINRA) that requires registration as Securities Traders of associated persons of FINRA members that are primarily responsible for the design, development or significant modification of algorithmic trading strategies. Securities Exchange Act of 1934 Release No. 77551, 81 FR 21914 (April 13, 2016). Associated persons who are responsible for the day-to-day supervision or direction of such activities would also be required to register. Associated persons falling under the expanded rule will be required to pass the requisite qualifications examination and will be subject to applicable continuing education requirements.