No-Action Relief from Swap Execution Facility Reinstatement Requirements under Commission Regulation 37.3(d)

Summary: No-Action Relief from Swap Execution Facility Reinstatement Requirements under Commission Regulation 37.3(d)

CFTC LETTER NO. 20-29 NO-ACTION, SEPTEMBER 15, 2020

Ms. Fran Kenck

Chief Compliance Officer

Tassat Derivatives LLC

22 West 21st

9th Floor

New York, New York 10010

Re:

No-Action Relief from Swap Execution Facility Reinstatement Requirements under

Commission Regulation 37.3(d)

Dear Ms. Kenck:

This letter responds to your letter, dated August 10, 2020, by which you request, on

behalf of Tassat Derivatives LLC (“Tassat”), the Division of Market Oversight (“DMO” or the

“Division”) of the Commodity Futures Trading Commission (the “Commission”) grant Tassat

no-action relief, pursuant to Commission Regulation 140.99,1 from the reinstatement

requirements under Commission Regulation 37.3(d)2 (the “Request Letter”).3 The Division

issues this letter to provide time-limited relief, subject to certain conditions, as set forth below.

I.

Background

A. trueEX LLC’s Transfer of its Registration to Tassat

On November 6, 2019, pursuant to Commission Regulation 37.3(e),4 the Commission

issued an order (“Transfer Order”) approving the transfer of trueEX LLC’s (“trueEX”) SEF

registration5 to its affiliated company, Tassat.6 Tassat acquired the SEF registration from trueEX

1 17 C.F.R. § 140.99.

2 17 C.F.R. § 37.3(d).

3 Letter from Fran Kenck, Chief Compliance Officer, Tassat Derivatives LLC, to Dorothy Dewitt, Director, Division

of Market Oversight (August 10, 2020) (“Request Letter”).

4 17 C.F.R. § 37.3(e).

5 trueEX is a Delaware limited liability company, and received temporary SEF registration on September 20, 2013

and full SEF registration on January 22, 2016. trueEX operated as a SEF for almost six years with interest rate

swaps as its core business. trueEX also was designated as a contract market (“DCM”) on September 25, 2012 and

U.S

gust 10, 2020) (“Request Letter”).

4 17 C.F.R. § 37.3(e).

5 trueEX is a Delaware limited liability company, and received temporary SEF registration on September 20, 2013

and full SEF registration on January 22, 2016. trueEX operated as a SEF for almost six years with interest rate

swaps as its core business. trueEX also was designated as a contract market (“DCM”) on September 25, 2012 and

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5000

Division of Market Oversight

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in an asset transfer, which included the transfer of key trueEX personnel, and all work product

related to the development of a physically deliverable Bitcoin swap Tassat intends to launch.7 In

the Transfer Order, the Commission found, subject to certain conditions,8 the petitioners

demonstrated, as required by Section 5h of the Commodity Exchange Act (“Act”), 7 U.S.C § 7b-

3, and Commission Regulations 37.3(c) and (e),9 Tassat will comply with the provisions in the

Act and Commission regulations thereunder for registration as a SEF. According to the Request

Letter, since the transfer, Tassat has been operational and in compliance with all Core Principles

and Commission regulations pertaining to SEFs.10 Tassat also has been working on launching its

Bitcoin swap contract.

B. Delays in the Launch of Tassat’s Bitcoin Contract

According to the Request Letter, trueEX started discussions with DMO staff in late 2017,

regarding the listing of derivatives on virtual currencies, such products being developed by its

affiliated company, Tassat.11 To this end, over many months, trueEX and Tassat jointly worked

with staff from DMO, Division of Clearing and Risk (“DCR”), and Division of Swap Dealer and

Intermediary Oversight (“DSIO”) in the enhanced review process described in CFTC Advisory

18-14 (“Staff Advisory 18-14”) to self-certify a physically deliverable Bitcoin swap contract.12

In June 2019, before the product was certified, th

11 To this end, over many months, trueEX and Tassat jointly worked

with staff from DMO, Division of Clearing and Risk (“DCR”), and Division of Swap Dealer and

Intermediary Oversight (“DSIO”) in the enhanced review process described in CFTC Advisory

18-14 (“Staff Advisory 18-14”) to self-certify a physically deliverable Bitcoin swap contract.12

In June 2019, before the product was certified, the board of trueEX Group decided to wind down

trueEx SEF’s existing interest rate swap (“IRS”) business and delist all IRS products, and

transfer to Tassat the SEF registration and all assets necessary for Tassat to carry on the virtual

currency business.13 Concurrent with the wind down of the IRS business, trueEX and Tassat

was deemed dormant as a DCM on November 1, 2019. trueEX Group was the holding company of trueEX LLC, and

is currently the holding company of Tassat, along with a few technology-related companies.

6 See CFTC, Order of Transfer of Swap Execution Facility Registration (November 6, 2019) available at

https://www.cftc.gov/sites/default/files/filings/documents/2019/orgseftrueexsignedorder191107.pdf ; see also Press

Release, CFTC, CFTC Approves Transfer of trueEX LLC Swap Execution Registration to Tassat Derivatives LLC

(Nov. 7, 2019), available at https://www.cftc.gov/PressRoom/PressReleases/8076-19.

7 See Transfer Order at 2 (stating, Tassat will be the surviving entity and successor-in-interest to the Transferor SEF

and will retain and assume all assets and liabilities associated with the SEF’s ongoing operations and regulated

activities.)

8 In the Transfer Order, the Commission also stated the approval of the transfer is subject to all representations made

by Tassat to the Commission in its request as well as Tassat’s compliance with the terms of the applicable no-actions

letters previously relied upon by trueEX

retain and assume all assets and liabilities associated with the SEF’s ongoing operations and regulated

activities.)

8 In the Transfer Order, the Commission also stated the approval of the transfer is subject to all representations made

by Tassat to the Commission in its request as well as Tassat’s compliance with the terms of the applicable no-actions

letters previously relied upon by trueEX. Included among the representations made by Tassat are: as the surviving

entity and successor in interest to trueEX, it will retain and assume all assets and liabilities associated with the SEF’s

ongoing operations and regulated activities; it will assume responsibility for complying with all application

provisions of the Act and Commission regulations promulgated thereunder including those promulgated under Part

37 and appendices thereto; and it will comply with all self-regulatory responsibilities and will maintain and enforce

all self-regulatory programs. See Id. at 2-3.

9 17 C.F.R. §§ 37.3 (c) and (e).

10 Request Letter at 3.

11 Id. at 1.

12 CFTC Staff Advisory No. 18-14: Advisory with respect to Virtual Currency Derivative Product Listings, May 21,

2018.

13 Request Letter at 1.

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completed the enhanced review process with Commission staff. In the Request Letter, Tassat

notes due to the decision to transfer the SEF registration, trueEX Group decided to launch the

Bitcoin swap product under Tassat once the registration was transferred.14 In terms of the timing,

Tassat notes the transfer request was initiated in June 2019, and trueEX ceased operations in July

2019, with its last trade occurring on July 19, 2019.15 Before it ceased its operations, trueEX self-

certified the uncleared physically deliverable Bitcoin swap, which became effective July 26,

2019.16 As noted above, trueEX’s SEF registration was transferred to Tassat in November 2019

he timing,

Tassat notes the transfer request was initiated in June 2019, and trueEX ceased operations in July

2019, with its last trade occurring on July 19, 2019.15 Before it ceased its operations, trueEX self-

certified the uncleared physically deliverable Bitcoin swap, which became effective July 26,

2019.16 As noted above, trueEX’s SEF registration was transferred to Tassat in November 2019.

In the Request Letter, Tassat states it has encountered numerous delays, both internal and

external, impacting the launch of its Bitcoin swap product, despite inheriting a fully operational

SEF, including its key personnel.17 Tassat states the timing for approval of the transfer coincided

with significant leadership changes at the Commission and changes in key Commission staff

during the summer and fall of 2019, and those changes delayed final approval of the transfer.18

Tassat also notes in early 2020, there were significant leadership changes at Tassat, specifically

the loss of key members of its senior management team, including its CEO and CFO.19

Moreover, the transition of new individuals into those roles was difficult as the timing coincided

with business disruptions caused by the Covid 19 pandemic.20 Tassat also states the Covid 19

pandemic impeded Tassat’s ability to finalize necessary agreements with partners, market

participants, and other stakeholders.21

Tassat states, despite the delays, it has not stopped working on, and preparing for, the

launch of its Bitcoin swap contract.22 Tassat anticipates launching the contract during the third

quarter of 2020.23 As of August 1, 2020,24 however, pursuant to Commission Regulation 40.1(f),

Tassat was deemed dormant because it had no trading for a period of 12 consecutive months,

requiring Tassat to seek reinstatement of its SEF registration in order to continue to operate.25

14 Id.

15 Id. at 2.

16 Id. at 1.

17 Id. at 2.

18 Id.

19 Id.

20 Id.

21 Id.

22 See id.

23 Id

020,24 however, pursuant to Commission Regulation 40.1(f),

Tassat was deemed dormant because it had no trading for a period of 12 consecutive months,

requiring Tassat to seek reinstatement of its SEF registration in order to continue to operate.25

14 Id.

15 Id. at 2.

16 Id. at 1.

17 Id. at 2.

18 Id.

19 Id.

20 Id.

21 Id.

22 See id.

23 Id.

24 Under Regulation 40.1 a dormant SEF is defined as “any swap execution facility on which no trading has

occurred for a period of twelve consecutive calendar months, preceding the first day of the most recent calendar

month.” Under this definition, trueEX’s last trade date was July 19, 2019 and the first day of the most recent

calendar month was August 1, 2020.

25 Although trueEX’s registration was not transferred to Tassat until November 6, 2019, the twelve month period for

purposes of determining dormancy was based upon trueEX’s last trade on July 19, 2020. Tassat notes in its Request

Letter, review of the registration transfer occurred over three of the twelve months determining dormancy. Request

Letter at 3.

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Absent this relief request, Tassat claims it would not be able to launch for more than six months

until it completes the reinstatement process, adding to the delays and financial losses it already

experienced.26

C. Regulations Relating to SEF Dormancy

Under Commission Regulation 40.1(f), a SEF becomes dormant if there is no trading on

the SEF “for a period of twelve consecutive calendar months, preceding the first day of the most

recent calendar month….”27 Under Commission Regulations 40.1(b) and (g), respectively, the

contracts/products and rules of a dormant SEF are also dormant.28 Under Section 5h of the Act

and Commission Regulation 37.3(a), a SEF must be properly registered in order to operate,

which includes the listing of contracts for trading.29 The Commission’s dormancy regulations

were originally promulgated to address the concern dormant registered entitie

ations 40.1(b) and (g), respectively, the

contracts/products and rules of a dormant SEF are also dormant.28 Under Section 5h of the Act

and Commission Regulation 37.3(a), a SEF must be properly registered in order to operate,

which includes the listing of contracts for trading.29 The Commission’s dormancy regulations

were originally promulgated to address the concern dormant registered entities are considered

inactive and “may no longer meet applicable statutory and regulatory requirements.”30

II.

Request for No-Action Relief

As discussed above, prior to becoming dormant on August 1, 2020, Tassat was unable to

launch its certified Bitcoin swap contact due to internal and external delays. Tassat requests

relief from the reinstatement requirements under Commission Regulation 37.3(d), so Tassat can

launch its contract for trading prior to reinstatement of Tassat’s registration.31 Tassat requests

this relief until the Commission has made a determination with respect to Tassat’s application for

reinstatement which, as represented in the Request Letter, Tassat agrees to file with the

Commission no later than one month from the date of issuance of this no-action relief provided

by the Division.32

26 Id. at 2.

27 17 C.F.R. § 40.1(f).

28 See 17 C.F.R. § 40.1(b) and (g).

29 Commission Regulation 37.3(d) provides a dormant SEF may reinstate its registration under the procedures of

Commission Regulation 37.3(b), the procedures for initial registration as a SEF by which the Commission may

make a determination the applicant has demonstrated compliance with the Act and the Commission's regulations

applicable to SEFs. An applicant for reinstatement may rely upon previously submitted materials if such materials

accurately describe the dormant SEF’s conditions at the time it applies for reinstatement of its registration

es for initial registration as a SEF by which the Commission may

make a determination the applicant has demonstrated compliance with the Act and the Commission's regulations

applicable to SEFs. An applicant for reinstatement may rely upon previously submitted materials if such materials

accurately describe the dormant SEF’s conditions at the time it applies for reinstatement of its registration. As part

of the reinstatement process under Commission Regulation 37.3(d), a dormant SEF would also be required to re-

certify its dormant contracts and rules. See 17 C.F.R. § 37.3(b) and (d).

30 See Amendments to New Regulatory Framework for Trading Facilities and Clearing Organizations, 67 FR 62873,

62874 (Oct. 9, 2002) (stating : “[t]he Commission proposed to amend parts 37, 38, 39 and 40 of its rules to clarify

that, when a registered entity that has become dormant determines to list or relist an initial product for trading…it

must demonstrate that it continues to satisfy the criteria for designation or registration”); see also Amendments

Pertinent to Registered Entities and Exempt Commercial Markets, 73 FR 8599, 8600 (Feb. 14, 2008) (stating: “[t]he

Commission recognizes that a significant period of inactivity can potentially have a negative impact on a registered

entity's ability to implement rules and list and clear contracts in a manner that remains consistent with current

market conditions, the Commission's regulations, and self-regulatory best practices”).

31 Request Letter at 4-5.

32 Id. at 5.

8600 (Feb. 14, 2008) (stating: “[t]he

Commission recognizes that a significant period of inactivity can potentially have a negative impact on a registered

entity's ability to implement rules and list and clear contracts in a manner that remains consistent with current

market conditions, the Commission's regulations, and self-regulatory best practices”).

31 Request Letter at 4-5.

32 Id. at 5.

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According to the Request Letter, Tassat believes such relief is warranted for the

following reasons.

A. The Commission’s Policy Concerns Underlying the Dormancy Requirement are

Inapplicable to Tassat

The Request Letter asserts the public policy purpose of the SEF dormancy provisions is

to discourage the abandonment of regulated operations which, over time, may fail to continue to

meet the “criteria for designation or registration”33 as criteria evolves.34 Tassat notes rules and

policies of a dormant SEF may become stale during the period when it was inactive, and changes

may have taken place in the markets not reflected in the dormant SEF’s rules or in the terms and

conditions of the contracts listed.35 In addition, Tassat notes after a sustained period of inactivity,

Commission staff may have little insight into the operations of the SEF.36 Tassat further notes the

reinstatement process established by Commission Regulation 37.3(d) enables staff to revisit a

dormant SEF, given a lapse of time since registration, and evaluate whether rules and processes

are in compliance.37

The Request Letter asserts these policy concerns are inapplicable to Tassat

ivity,

Commission staff may have little insight into the operations of the SEF.36 Tassat further notes the

reinstatement process established by Commission Regulation 37.3(d) enables staff to revisit a

dormant SEF, given a lapse of time since registration, and evaluate whether rules and processes

are in compliance.37

The Request Letter asserts these policy concerns are inapplicable to Tassat. Tassat notes

the dormancy period (applicable first to trueEX and then Tassat) commenced after the last trade

was executed on trueEX in July 2019, and the registration transfer was approved by the

Commission on November 6, 2019.38 During the period from July 19th, when trueEX had its last

trade to November 6, 2020, Tassat was unable to provide services and launch products as a SEF,

while waiting for Commission approval of the SEF registration transfer. 39 In essence, Tassat

states the period it had to launch and trade the new product to avoid dormancy was not a 12

month period due to the timing of the transfer request review period.

Tassat further notes it has never stopped being operational, from the time of the initiation

of the transfer in June 2019, to date. Tassat has engaged with Commission staff regarding the

launch of its Bitcoin swap contract, and it has continued to meet all of its regulatory obligations

under the Commission’s regulations.40 In particular, Tassat states, while waiting for the approval

of the SEF registration transfer from trueEX, Tassat staff worked with DMO’s systems safeguard

33 See Amendments to New Regulatory Framework for Trading Facilities and Clearing Organizations, 67 Fed. Reg.

62873, 62874 (Oct. 9, 2002).

34 Request Letter at 3.

35 Id.

36 Id.

37 Id.

38 Id.

39 Id. (explaining Tassat was unable to provide services and launch products as a SEF during the time the

registration transfer was reviewed and approved by the Commission in November 2019, giving Tassat less

than 12 months to launch).

40 Id.

k for Trading Facilities and Clearing Organizations, 67 Fed. Reg.

62873, 62874 (Oct. 9, 2002).

34 Request Letter at 3.

35 Id.

36 Id.

37 Id.

38 Id.

39 Id. (explaining Tassat was unable to provide services and launch products as a SEF during the time the

registration transfer was reviewed and approved by the Commission in November 2019, giving Tassat less

than 12 months to launch).

40 Id.

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team from August 2019 through November 2019 on Tassat’s planned changes to its platform in

anticipation of launching Bitcoin swaps.41 Tassat also publically posted its rulebook, dated

November 6, 2019, on its website upon the approval of the SEF transfer.42 This rulebook, used

by trueEX’s SEF, was modified to reflect necessary changes to the core business, and

incorporated the contract specifications and workflow of the certified physically deliverable

Bitcoin swap contract.43

Tassat’s chief compliance officer completed the 2019 Annual Compliance Review and

filed it with the Commission in April 2020,44 in compliance with Section 5h(f)(15)(D) of the

Act45 and Commission Regulation 37.1501(e).46 Tassat states, although the SEF had not yet

launched, the scope of the review in the report included a thorough review of policies and

procedures, part of the asset transfer from trueEX for compliance with SEF Core Principles and

Commission regulations.47 Tassat also continued to make its quarterly financial filings and to

maintain capital and liquid assets necessary to comply with Section 5h(f)(13)48 and Commission

Regulation 37.1300,49 and has recently submitted its filing for the quarter ending June 30,

2020.50 Moreover, in February 2020, Tassat responded to DMO inquiries related to its pandemic

preparedness, and in June 2020, responded to the DMO resilience survey.51 Tassat states it

provided responses at all times which indicated it was working toward an imminent launch

date.52

In its Request Letter, Tassat further attests all documentation and work product

transitioned from trueEX i

0,

2020.50 Moreover, in February 2020, Tassat responded to DMO inquiries related to its pandemic

preparedness, and in June 2020, responded to the DMO resilience survey.51 Tassat states it

provided responses at all times which indicated it was working toward an imminent launch

date.52

In its Request Letter, Tassat further attests all documentation and work product

transitioned from trueEX is not stale and has been updated as necessary due to changing business

conditions (most notably the Covid 19 pandemic).53 Tassat states it recently engaged an external

vendor to complete a full scope security assessment of its trading platform in anticipation of a

third quarter launch.54 Tassat also will make any necessary amendments to its rulebook prior to

launch.55

41 Id.

42 Id.

43 Id.

44 Id.

45 7 U.S.C. § 7b-3(f)(15) (requiring the chief compliance officer to file an annual report).

46 17 C.F.R. § 37.1501 (describing the annual report to be filed by the chief compliance officer).

47 Request Letter at 3.

48 7 U.S.C. § 7b-3(f)(13) (requiring the SEF to have adequate financial, operational, and managerial resources

to discharge its responsibility).

49 17 C.F.R. § 37.1300 (requiring the SEF to have adequate financial, operational, and managerial resources

to discharge its responsibility).

50 Request Letter at 3.

51 Id. at 4.

52 Id.

53 Id.

54 Id.

55 Id.

ce officer).

47 Request Letter at 3.

48 7 U.S.C. § 7b-3(f)(13) (requiring the SEF to have adequate financial, operational, and managerial resources

to discharge its responsibility).

49 17 C.F.R. § 37.1300 (requiring the SEF to have adequate financial, operational, and managerial resources

to discharge its responsibility).

50 Request Letter at 3.

51 Id. at 4.

52 Id.

53 Id.

54 Id.

55 Id.

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B. The Requested Relief Comports with Section 3 of the Act

Tassat’s Request Letter references Section 3 of the Act which, in part, states the purpose

of the Act is to, among other things, “promote responsible innovation.”56 Tassat states launching

the physically deliverable Bitcoin swap contract has been delayed due to various factors as noted

above, and the requirements regarding reinstatement should not now add an additional

impediment to the conditions delaying Tassat’s launch.57 Tassat states the requested relief is not

inconsistent with the purposes of the Act, but rather will provide a window of time to finalize

agreements which have been delayed, most recently due to the impact of the Covid 19

pandemic.58 In the spirit of “responsible innovation,” Tassat has diligently followed the process

for listing virtual currency derivatives as required by Staff Advisory 18-14, and has navigated the

process by working collaboratively with DMO, DSIO, and DCR to address all regulatory

concerns regarding Tassat’s novel product and workflow.59

C

d, most recently due to the impact of the Covid 19

pandemic.58 In the spirit of “responsible innovation,” Tassat has diligently followed the process

for listing virtual currency derivatives as required by Staff Advisory 18-14, and has navigated the

process by working collaboratively with DMO, DSIO, and DCR to address all regulatory

concerns regarding Tassat’s novel product and workflow.59

C. The Requested Relief Furthers the Public Interest

The Request Letter asserts having new entrants in this marketplace is in the public

interest, and dormancy is not intended to act as a barrier to such entry.60 Tassat states, given the

costs it incurred in obtaining the transferred SEF registration and in preparing to launch a new

physically deliverable Bitcoin swap contract, allowing Tassat to operate and launch its

previously certified product, while it pursues the reinstatement of its dormant SEF registration, is

in the public interest as it encourages both innovation and new market entrants.61 In contrast,

Tassat notes a delay caused by the reinstatement of Tassat’s registration would, absent relief, act

to discourage innovation and create an additional barrier to a new entrant successfully bringing

an innovative product to the market.62 Tassat further states it intends to offer a bitcoin swap

contract different from products offered by other SEFs and DCMs.63 Tassat further states there

are market participants currently interested in onboarding on Tassat, and eager to trade this

product which specifically targets institutional market participants.64

III.

Relief Provided

DMO has determined it is appropriate to grant Tassat’s request for time-limited relief

from Commission Regulation 37.3(d), subject to certain conditions. DMO believes such relief is

56 7 U.S.C. § 5(b).

57 Request Letter at 4.

58 Id.

59 Id.

60 Id.

61 Id.

62 Id.

63 Id.

64 Id.

stitutional market participants.64

III.

Relief Provided

DMO has determined it is appropriate to grant Tassat’s request for time-limited relief

from Commission Regulation 37.3(d), subject to certain conditions. DMO believes such relief is

56 7 U.S.C. § 5(b).

57 Request Letter at 4.

58 Id.

59 Id.

60 Id.

61 Id.

62 Id.

63 Id.

64 Id.

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appropriate considering Tassat’s facts and the unique circumstances surrounding its attempt to

launch its certified product, as explained below.

Since late 2017, Tassat, along with trueEX worked to create and certify a Bitcoin swap

contract. The parties cooperated with DMO, DCR, and DSIO staff to undertake an enhanced

review of the contract. As part of the review, Tassat consistently expended time and resources to

meet with Commissioners and Commission staff, and to prepare and submit various materials

and information in response to Commission staff inquiries about the proposed contract. Tassat’s

cooperation with staff’s enhanced review of the contract enabled staff to conduct the review in a

manner consistent with industry practice, Staff Advisory 18-14, and the Act’s purposes,

including deterring and preventing manipulation or any other disruptions to market integrity,

while also promoting responsible innovation, as set forth in CEA Section 3.65

In addition, as noted above, from the time the registration was transferred to Tassat and

continuing to date, Tassat has been active both in terms of preparing to launch its product and in

complying with all regulatory requirements. It is noteworthy Tassat had less than 12 months to

launch its product. Finally, internal and external factors prevented Tassat from earlier launching

of its product, particularly as a result of the Covid 19 pandemic hampering Tassat’s ability to

obtain the appropriate agreements with third parties

h in terms of preparing to launch its product and in

complying with all regulatory requirements. It is noteworthy Tassat had less than 12 months to

launch its product. Finally, internal and external factors prevented Tassat from earlier launching

of its product, particularly as a result of the Covid 19 pandemic hampering Tassat’s ability to

obtain the appropriate agreements with third parties.

In light of the unique circumstances facing Tassat, and its representations in the Request

Letter, the Division believes time-limited relief is warranted, notwithstanding Tassat’s dormancy

status. Based on Tassat’s representations made in the Request Letter and DMO’s records, Tassat

has, with the exception of a lack of trading on its platform, maintained an active SEF in

compliance with all regulatory requirements since the transfer of registration in November 2019.

This is reflected by Tassat’s submission of modifications to its rulebook to show necessary

changes to its business and incorporate contract specifications; Tassat’s continuous updates to

DMO staff on planned changes to its systems; Tassat’s timely quarterly financial filings, and its

compliance with all capital and liquid asset requirements; Tassat’s annual compliance report

filings, including one recently for the period ending June 30, 2020; and Tassat’s responses to

Commission staff inquiries related to pandemic preparedness in February 2020, and the DMO

resilience survey in June 2020. Tassat provided a response at all times indicating it was working

toward an imminent launch date.

Accordingly, the Division will not recommend the Commission commence an

enforcement action against Tassat for failing to reinstate its SEF registration pursuant to

Commission Regulation 37.3(d), prior to Tassat listing and launching its certified Bitcoin swap

product, or against any Tassat participant who trades the contract upon such listing on Tassat’s

platform; provided, however:

date.

Accordingly, the Division will not recommend the Commission commence an

enforcement action against Tassat for failing to reinstate its SEF registration pursuant to

Commission Regulation 37.3(d), prior to Tassat listing and launching its certified Bitcoin swap

product, or against any Tassat participant who trades the contract upon such listing on Tassat’s

platform; provided, however:

(1) Tassat shall file an application for reinstatement in accordance with Commission

Regulation 37.3(d), no later than one month from the date of this letter;

65 See 7 U.S.C. § 5(b).

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(2) Tassat shall not list the contract for trading until Tassat files its application for

reinstatement in accordance with Commission Regulation 37.3(d), and until it has re-certified its

bitcoin product for trading; and

(3) Until Tassat’s request for reinstatement of its SEF registration is granted, Tassat shall

not certify or list for trading any product other than the previously certified Bitcoin swap

contract.

For the avoidance of doubt, if Tassat fails to meet any of the conditions above or to

comply with the CEA or applicable Commission regulations while this letter is in effect, DMO

will immediately exercise its retained authority described in Section IV, below, to terminate this

letter and the relief provided herein.66

This letter will be effective on the date that it is issued, and shall remain in effect until the

earlier of (1) the date 12 months after the date on which this letter is issued, or (2) the date on

which the Commission issues an order approving or denying Tassat’s application for

reinstatement of its registration as a SEF.

IV.

Conclusion

The no-action positions taken herein do not excuse affected persons from compliance

with any other applicable requirements of the CEA or the Commission’s regulations thereunder

onths after the date on which this letter is issued, or (2) the date on

which the Commission issues an order approving or denying Tassat’s application for

reinstatement of its registration as a SEF.

IV.

Conclusion

The no-action positions taken herein do not excuse affected persons from compliance

with any other applicable requirements of the CEA or the Commission’s regulations thereunder.

This letter and the position taken herein represent the views of DMO only, and do not necessarily

represent the views of the Commission or of any other division or office of the Commission.

Further, this letter, and the relief contained herein, is based upon the representations made to

DMO by Tassat. Any different, changed, or omitted material facts or circumstances may render

this letter void. Finally, as with all no-action letters, DMO retains the authority to condition

further, modify, suspend, terminate, or otherwise restrict the terms of the relief provided herein

in its discretion.

66 Also, for avoidance of doubt during the period of this letter, any market participant that trades

or participates on Tassat must continue to comply with the CEA and applicable Commission

regulations applicable to trading on a SEF.

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If you have any questions regarding this staff no-action letter, please contact Nancy

Markowitz, Deputy Director, at nmarkowitz@cftc.gov, (202) 418-5453.

Sincerely,

__________________________

Dorothy DeWitt

Director

Division of Market Oversight