Contract exchange seeks compliance: as low as 1,500 knives for high NFA licenses

Editor's Note: This article has been deleted without changing the author's original intention.

The number of contract trading platforms is growing rapidly.

Recently, the futures contract business section of the existing trading platforms has been launched one after another, and the number of emerging contract trading platforms has also increased rapidly. In the current market, the spot stock is limited, and contract transactions can maximize the revenue of the trading platform.

How to increase your chips in this "contract trading war"? Some emerging contract trading platforms are aimed at "compliance".

As a result, some platforms have publicized the licenses with exaggerated labels such as "U.S.-Europe dual licenses", "contract transaction necessary", "global rare licenses" and so on.

For example, an NFA National Futures Association license was described by the trading platform as "only 5 companies in the world got the license", and on the other side, the overseas license business legal company said "the minimum registration It costs US $ 1500. "

Overseas license "gold-plated" returns to the contract market

According to Blocklike's observation, on the compliance of the contract trading platform, the endorsement effect of some common licenses is relatively limited, and the path of compliance still needs to be explored.

In the external publicity of a small digital currency option trading platform-related community, the license advantage is known as a major bright spot: "The global five-piece license regulatory operation, Belize license, Estonian license, US MSB license, Canadian MSB license, US NFA license .Including digital currency transactions, legal currency transactions, foreign exchange transactions, wallet storage and inter-bank dollar settlement and digital currency settlement. "At the same time, it is also said that" only 5 companies in the world have obtained the license. "

For NFA licenses, the prices given by several license business consulting companies contacted by Blocklike are relatively low, which varies according to whether or not a member is registered: the application fee for registered members is between 38,000 and 42,000 US dollars, and the member fee for registration is 1.8- Between 20,000 US dollars, non-members only need 1500 to 3000 US dollars.

A manager of a legal company operating an overseas licensing business told Blocklike:

"The US NFA is a relatively simple license. Some foreign exchange-related platforms prefer to apply for it. It can be said that it is an entry-level license. Non-member registration only costs $ 1,500. Non-members are not strictly licenses, similar to Hang up the name, if it is used for publicity is enough. "

According to public information, the National Futures Association of the United States is a self-regulatory organization for the futures industry established in 1976 in accordance with the provisions of Section 17 of the US Commodity Trading Act. mechanism. Currently, NFA has approximately 4,300 members and 50,000 affiliated members (representatives of NFA member companies).

From this point of view, the low-cost licenses that can be obtained for thousands of dollars have become the highlights and bonus points of the platform under the layers of packaging on some trading platforms. Because of the poor information at home and abroad, exaggerated promotional information is likely to mislead investors.

A block chain said from the media: "It turns out that it is not safe to take these licenses, and now these local licenses are basically produced by assembly lines, and it is not difficult. Now these projects like to take these certificates If you do n’t have a certificate, you will say that you are applying or will apply in the future. However, these things are even sold in the circle of friends. How much gold do you have? "

Contract trading platform surges, "contract year" arrives

Affected by market conditions, both 2019 and 2020 are known as "contract years" in the industry.

Looking back at the data, only two of the top 10 global exchanges in 2018 have opened contract transactions. Today, there are 8 top 10 exchanges with global trading volume that have opened contract trading.

In 2019, the overall transaction volume in the contract market showed a steady upward trend. The trading volume of the head contract exchange soared from US $ 47.6 billion at the beginning of the year to US $ 207 billion at the end of the year, an increase of more than 300%. According to the monthly report issued by CryptoCompare, in March 2020, crypto derivatives trading volume reached 600 billion US dollars, a record high. Of this, $ 53 billion was completed in one day. In contrast, in the past two years, the trading volume of digital financial derivatives has been increasing.

As various concepts such as IEO, platform coins, and staking have faded, the competition in trading platforms has become more intense. According to statistics from media reports, there are more than 10 newly launched small and medium-sized contract trading platforms recently.

A contract investor described it as follows: "If the current market is likened to a large capital market, then the leveraged contracts are even more effective here. Many investors believe the contract market More over-the-counter players and funds will lead the industry and revitalize the entire market. "

At the same time, "small team" and "high profit" are often used to describe contract trading platforms.

In May 2019, when Bitfinex, which provides leveraged bitcoin trading, is about to issue platform coins, the disclosed iFinex 2018 financial report made everyone in the industry shine: the team has nearly a hundred people and the development team has only 25 employees. Net profit of USD 418.2 million and shareholder dividends of USD 261 million. Many exchange founders have expressed their views on this.

Contract trading is like a piece of fat, which attracts entrepreneurs to try in this direction. With the increasing number of contract trading platforms, compliance will become an unavoidable topic.

Contract trading platform license "complex"

So, in addition to NFA licenses, what other licenses do existing contract trading platforms favor?

In terms of geography, open countries such as the United States, Canada, and Singapore are more friendly to digital currencies, and trading platforms can apply for relevant licenses to legally develop blockchain asset trading services locally.

According to the opinion of the manager of the legal company mentioned above, currently, most of the trading platforms involved in blockchain business are MSB (Money Services Business) licenses. This is a type of financial license supervised and issued by Fincen (the Financial Crimes Enforcement Agency of the United States Department of the Treasury). The main object of the supervision is the business and company related to money services, including digital currency and virtual currency transactions, ICO issuance And foreign exchange, international remittance and other businesses.

The current quotation of the license is usually before RMB 5-85,000. It is also one of the licenses held by Binance, Huobi, OKEx, Matcha, and Paypal.

The manager of the legal company also introduced:

"Licenses that are more suitable for digital currency contracts can be considered MAS licenses in Thailand and Singapore. However, this kind of license is very difficult. Not only is the application fee high and expensive, but the margin and maintenance costs are relatively high. The cost is 15- Between US $ 200,000, a certain deposit is also required. "

Singapore MAS is called Monetary Authority of Singapore. At the end of 2019, the Singapore Payment Services Act was proposed again, which once aroused the attention of the domestic blockchain industry, and exchanges actively applied for it. The bill shows Singapore ’s firm stance on the regulation of digital currency business, that is, all digital currency exchanges, wallets and OTC platforms must meet the relevant anti-money laundering regulations and apply for corresponding licenses.

In addition, in the United States, LedgerX15, a regulated digital currency derivatives exchange regulated by the federal government, is applying for a designated contract market (DCM) license, which means that it can provide bitcoin, bitcoin options and futures for retail investors.

Generally speaking, in the traditional futures market, there are already perfect laws and regulations. However, the supervision of the digital currency contract trading platform is still relatively vague. With the passage of time, derivatives trading may have an increasing impact on the development of the industry. When the contract trading platform seeks to develop the platform, how to meet the compliance requirements and move closer to traditional institutions requires all practitioners to think about it.