CFTC slaps Wall Street financial tycoons in the face and is carefully considering the definition of Bitcoin "delivery"

The U.S. Commodity Futures Trading Commission (CFTC) is reportedly still working on defining when cryptocurrencies can be considered “delivered” due to the complexity of encryption key management.

CFTC Commissioner Brian Quintenz said at last week’s event that officials at the agency are working very hard to draw on the agency’s past enforcement actions to come up with an appropriate answer to the question, while also referring to recent criticism of Bitcoin in the media, including JPMorgan Chase CEO Jamie Dimon’s call that Bitcoin is a “scam.”

He said at the event:

“Is there anyone here willing to tell me how to define actual delivery of a virtual commodity? The CFTC is currently working very hard to come up with an appropriate response to this question.”

The lack of clear rules in this area has led to conflicts between existing regulatory laws and new technologies and products. This is also the reason why the cryptocurrency exchange Bitfinex was fined $75,000 by the CFTC in June 2016 for failing to properly deliver funds to its customers.

The enforcement action also triggered a petition filed by the US law firm Steptoe & Johnson LLP. Last July, the law firm asked the CFTC to provide transparency on the delivery of blockchain asset transactions.

While Quintenz did not offer a firm timeline for his proposed rule, he said the issue will be discussed by the agency itself as well as by a private-sector advisory committee.

“Once the recommendations are made, I would expect to solicit input and feedback from the Technical Advisory Committee as we work to provide regulatory consistency with other commodities… In addition to regulatory certainty, a more constructive trading committee may also develop.”

In addition, Quintenz believes that recent media coverage of Bitcoin has seriously misled people.

In recent days, a number of high-profile Wall Street figures and financial analysts have taken aim at the cryptocurrency market, including Goldman Sachs CEO Lloyd Blankfein and Morgan Stanley CEO James Gorman, who have also offered some negative views on the technology.

In Quintenz's view, the views of these financial professionals, especially those regarding market speculation, miss the point.

“Of course, we can debate the value of Bitcoin, whether it is overvalued, undervalued, or just a scam… In reality, talking about it based on price completely ignores the broader technology and innovation achievements of Bitcoin.”

“One of the most attractive things about Bitcoin is not that it is a virtual currency, but that it is an ecosystem.”

These characteristics, as well as the benefits and risks they can bring, represent both challenges and opportunities for regulators such as the CFTC.

"It is important that we as managers are aware of the diversity of these potential taxonomic ecosystems, from the narrow, to the very private, to the very broad, so that we can assess risk and regulate appropriately," he said.