The end of what was said:
>>: Just one more point on that.
The question to regulate or not, usually with regard to underlined activity.
To regulate Bitcoin is like regulating the Internet.
It is what you do on the Internet or how you use that, money transfer, by an asset, e-commerce or otherwise.
You don't just regulate the Internet, no one does and the Internet is a protocol. Most people don't know that. But it is TCP/IP, Internet protocol. Nobody in the room really cares about analyzing what the protocol is or who wrote it or otherwise, but it has long existed, originally developed with government research money, and it is used reliably for very long time.
Bitcoin is another protocol.
What would you regulate? The activity using the protocol called Bitcoin and if it is for money transfer, then okay. If it is for swaps, that is the regulation that the FCC uses as an index. If it has a Bitcoin asset beneath it.
You cannot say regulate Bitcoin so much as you can say regulate activity that touches, utilizes, or otherwise, involves the use of that protocol.
>>: From the perspective of this regulator, to what extent would markets and swaps for Bitcoin be susceptible to me relation?
>>: So with regard to what we have established in the filing that we presented to the CF CT, we built a a swap. And the swap relies on an index, a series of underlined markets.
The underlined markets could potentially be susceptible to manipulation and what we had to establish with the staff and ultimately our self certification is that the numbers we are pulling from these various exchanges will ultimately be curated, filtered, take out anonymous behavior to prevent somebody from essentially attempting to manipulate, either meeting the requirement that is not susceptible for many relation and two levels.
First is our market susceptible? Every participation is marketed and we have our own surveillance and we also have the surveillance of the NSA to back us up with regard to market participants.
He also surveilled the underlined market that feed into the index and as I mentioned before we had information sharing agreements with each market so the location we pull data from provides us access to individual traders if necessary, positions they may hold to determine whether there is going to be manipulation.
As a matter of fact,, the changes, the exchanges we use are proud of the fact they are following KYC and what robust market places to address the very question you are asking, which is is there many relation happening? They want a sound marketplace and they are achieving it in their marketplaces and we can take the data and build the swaps off of that.
>>: So you have these information sharing agreements between the TeraExchange, the cash markets, and the SEF's? Correct.
>>: Okay. But what other functions, surveillance functions do you use? You're getting a right of access of some sort, but otherwise, how are you surveilling these individual cash markets around the globe?
>>: We use surveillance by pulling the feed and watching surveillance on the feed, watch the price action and when we find the behavior, it is filtered in the index automatically props up on call for us to make an inquiry.
During the analysis for between March and when we ultimately filed, there was activity on what in the exchanges.
For example, it essentially look like someone could essentially be doing something. It triggered flags on our system to advise us to look out, look at this behavior which we did.
We made the phone call, spoke to the technology personnel and also spoke to the underlying controllers of the account. They said no. We know these players. There is nobody moving the market. There is no lost to trade.
We have that information at our disposal, so we can constantly monitor it.
>>: Anything else?
>>: I think that is going to bring the meeting to a close. We have gone over time.
Thank you again very, very much. Just one last point I would like to make on Bitcoin.
Obviously, there is relevancy here in taking up this topic today in light of TeraExchange filing.
As I mentioned before we expect that we are going to receive other filings from other platforms as well in the very, very near future.
I was interested to hear in some, some of the remarks by the professor about these applications that could be made at this technology in a way that is actually useful to our space, the derivatives space.
And it just seems like based on what I have learned, some of those applications could be so compelling that it would be a real mistake for us as a commission to not make sure we are staying on top of these development's.
Not, because we want to do anything other than understand the developments because it seems like this protocol, the Bitcoin protocol or something like it is very, very likely here to stay.
So the more information and education we can do on this now in trying to stay somewhere on the appropriate spot of the learning curve, it seems to be a very sensible thing to do.
So I think that it has been very, very helpful and thank you for representing the CFCT staff and I will turn it back over now.
>>: I think we are good. I want to thank everybody for coming. I want to give a special thanks to the staff and her team that does all the work going on behind the scenes.
I appreciate everyone coming today. And as the temporary chair, I now adjourn the meeting.
Thank you for your participation in today's conference. You may now disconnect.
5:00 PM (EST)