Bitcoin, the burgeoning virtual currency, lately has been the subject of much speculation--in every sense of the word. Lots of people have been speculating about what it is and whether it has a future. Some people have been speculating on its future by purchasing the currency in hopes that its price will rise and they can cash in. The regulators have been speculating too--speculating about whether and how they can regulate the currency.

In the past several days, there has been news of the forging of a long-awaited compromise among the commissioners at the Commodity Futures Trading Commission (CFTC). The potential deal, which will be discussed at a meeting next Thursday, relates to the rules governing swap execution facilities (SEFs). SEFs are the new swap trading venues created by Dodd-Frank. The CFTC's proposal was perceived by many to be unworkable.

Even if the CFTC successfully crafts a better final set of rules for SEFs, SEFs may not attract much business. Last month, Bloomberg--a would-be SEF operator--sued the CFTC over a Dodd-Frank rule that Bloomberg alleges will create a competitive disadvantage for SEFs. The challenged rule relates to margin, which is money that a clearinghouse collects to protect itself from the risks associated with the swaps and futures that it clears. In determining how much margin to collect, a clearinghouse considers, among other factors, how long it would take to liquidate the particular swap or future. Bloomberg is arguing that the CFTC violated its requirements under the Administrative Procedure Act and its statutory obligations to conduct benefit-cost analysis. At issue is a directive that clearinghouses use a 5-day minimum liquidation time for financial swaps and only a 1-day minimum for other types of swaps and futures. As a consequence, margin requirements for financial swaps will be higher than for comparable futures.

The distinction matters, because market participants, who quite naturally prefer to make smaller margin payments, will favor futures--which do not trade on SEFs--to swaps. That spells trouble for SEFs. Futures that are effective substitutes for swaps are already cropping up, although margin differences are not the only reason for this trend.

The signals coming out of the CFTC regarding a potentially revamped SEF rule are positive, but the SEF battles will continue. As discussed in an earlier post, Dodd-Frank has set up some fierce competitive battles, into which the CFTC and courts are being dragged because of the CFTC's failure to follow sound rulemaking procedures.

The latest Dodd-Frank lawsuit was filed yesterday against the Commodity Futures Trading Commission by the DTCC Data Repository. It is a front in the fight between competitors for control of a market created by Dodd-Frank--the market for collecting data about swaps transactions. The CFTC is standing very uncomfortably in the middle of this fight because of its undisciplined process for setting the rules of the game.

Yesterday, Richard Cordray appeared before the Senate Banking Committee to present the Bureau of Consumer Financial Protection's semiannual report. His plans to appear before the House Financial Services Committee today ran into a roadblock--House Financial Services Committee Chairman Jeb Hensarling told him not to come. The letter of dis-invitation is premised on the fact that Mr. Cordray's status at the CFPB is under a legal cloud. That cloud is so big that not being permitted to testify is the least of Cordray's problems.

Yesterday, officials from nine countries sent a letter to Treasury Secretary Lew out of frustration "at the lack of progress in developing workable cross-border rules as part of reforms of the OTC derivatives market." They noted that they were "already starting to see evidence of fragmentation in this vitally important financial market, as a result of lack of regulatory coordination." This letter is just the most recent attempt by foreign government officials to rein in their American counterparts, whose regulatory appetites appear to be insatiable.

The letter sets forth a number of principles that should govern the regulation of the over-the-counter derivatives market. At the core, these principles envision a regulatory scheme in which regulators share responsibility for the derivatives market, but don't impose duplicative regulations. No one regulator is entitled to set the rules for the whole world. Instead, regulators in one country defer to regulators in another country as long as "the outcome delivered by the rules is equivalent in terms of the protections provided." In making an equivalence determination, it is unrealistic to demand "a precise rule-by-rule match up."

The Securities and Exchange Commission and the Commodity Futures Trading Commission talk a lot about "substituted compliance" and "equivalence," but when top officials elaborate, their understanding of these terms appears more limited than their foreign counterparts' understanding. Former SEC Chairman Elisse Walter, for example, called for an ambiguous "middle ground" approach in which the SEC "would reserve the right to insist upon compliance with our own regulations when necessary." The CFTC's Chairman Gensler has been more aggressive than the SEC in interpreting its Dodd-Frank authority, less willing to surrender control over entities with even the slightest U.S. connection, and unwilling to provide clear rules to govern the agency's extraterritorial reach.

As more reasonable voices at both the SEC and CFTC have argued, the U.S. should not try to be the world's OTC derivatives policeman. It should share the job with foreign regulators, who are willing and eager to do their part.

On Tuesday--a day early, the Fed released the minutes of its March Open Market Committee meeting to recipients on the Hill and at financial institutions and trade associations. The Fed explained that the early release was accidental and released the minutes to everybody else on Wednesday morning--earlier than it otherwise would have. There is no reason to conclude that the Tuesday release was anything other than an innocent mistake. This incident nevertheless serves as a good reminder of the dangers of assuming that sensitive nonpublic information is safe in government hands.

Another reminder came last month, when the Securities and Exchange Commission's inspector general released a report about the SEC's information controls. The report found, among other things, that there is nothing preventing SEC employees, contractors, and interns "from saving and uploading sensitive or nonpublic information on non-SEC computers." The inspector general also found that the SEC did not have proper protocols for tracking information exchanged with the Financial Stability Oversight Council, the Office of Financial Research, and other agencies. When the SEC adopted Form PF (which the SEC uses to collect data for the FSOC) in 2011, it said that "our staff is working to design controls and systems for the use and handling of Form PF data in a manner that reflects the sensitivity of this data and is consistent with the confidentiality protections established in the Dodd-Frank Act." The inspector general's report suggests that there is still work to be done.

In addition to taking tougher measures to protect nonpublic, sensitive data, regulators should think carefully about how much information they need. When they decide to collect information, they should take into account the possibility of unintentional or intentional data leaks and the potential consequences of such leaks. Sometimes, the government's need for the information will be outweighed by the harm that would occur if the information were improperly disclosed. Regulators should not simply assume that mistakes will never happen.

The Securities and Exchange Commission issued long-awaited guidance yesterday about companies' use of social media in a manner that comports with Reg FD, the SEC's regulation governing companies' disclosures of material nonpublic information. The guidance came in the form of a Section 21(a) Report announcing the SEC's decision not to bring an enforcement action against Netflix CEO Reed Hastings. The SEC had contemplated taking action against Mr. Hastings for a posting he made on Facebook announcing to his more than 200,000 friends that Netflix users had watched a record one billion hours of content in a month. To the SEC's dismay, he did so without "input from Netflix's chief financial officer, the legal department, or investor relations department."

The SEC gave Mr. Hastings a pass, but warned other CEOs--even those with "a large number of friends or other social media contacts"--not to count on getting similar mercy unless investors are told in advance that they need to friend the CEO to keep apprised of corporate developments.

The SEC's guidance provides some helpful clarity, but the unfortunate reality is that, even with such guidance, the SEC's rules make it difficult and legally treacherous for companies and their executives to communicate with investors and the public. As the SEC cautioned in the 21(a) Report, there are no bright lines; each case will be reviewed according to its facts. Fear of a possible SEC enforcement action will continue to dampen companies' ability to use new--and more traditional--media effectively. It might be time for legislators and regulators to take another look at whether the rules governing corporate communications are actually good for investors.

The Bureau of Consumer Financial Protection released an expanded consumer complaint database today. It contains more than 90,000 complaints made to the Bureau about credit cards, mortgages, bank accounts and services, student loans, and other consumer loans. The database includes basic information such as the affected product (mortgage, bank account, etc.), the issue (for example, "problems caused by my funds being low," loan modification), the name of the financial institution, and the disposition of the complaint. These complaints are not verified by the Bureau, and there is no way for a database user to assess whether the complaints have merit.

The Bureau, nevertheless, treats the list of complaints as if it is a key data set for understanding the financial markets and "support[ing] innovation in the consumer finance space." It has created a handful of charts and graphs based on the data and encourages members of the public to do the same. For example, the Bureau created a bar graph to show the top ten companies by number of complaints received. As a note at the bottom of the chart indicates, the chart is meaningless because "The data has not been normalized . . .companies with more customers could be expected to have more complaints." The release of unfiltered complaint data by company is misleading and indicative of an approach to regulation that is rooted in sensationalism, not careful analysis.

Today's Wall Street Journal includes a story about the SEC's new focus on private fund investment advisers' expenses. The agency is said to be looking into whether advisers to hedge funds and other private funds are disclosing to investors all the types of expenses they are charging to funds. Are investors being told that their fund is paying for first-class air travel and fancy meals? Hedge fund adviser expenses are attracting the SEC's interest now because Dodd-Frank subjected private fund advisers to SEC registration and routine examination.

SEC staff examiners are undoubtedly having fun with the project and compiling some great stories of unusual adviser expenses. Nevertheless, the agency ought to think carefully about the expenses it is incurring in conducting these exams. After all, according to an SEC staff report, the SEC examined less than ten percent of registered investment advisers in 2010, which was before Dodd-Frank's private fund adviser mandate took effect. SEC examiners should be looking at funds that cater to retail investors, not those that serve wealthy investors--the only investors permitted by law to invest in hedge funds. Those investors can afford to hire experts to help them figure out how and where to invest their money. As pointed out to the Journal by the director of hedge fund research for one asset manager--"At the end of the day, it's my job to ask the right questions." The SEC should concentrate on more important tasks and let private market discipline handle hedge fund advisers' golf outings.

The Chamber of Commerce released a new report on Tuesday on the importance of cost-benefit analysis in financial regulation. It makes the point that such analysis is essential in the context of the massive Dodd-Frank rulemaking effort:

Cost-benefit analysis provides a regulatory template designed to ensure that, despite the accelerated pace, regulators will not cut corners but will engage in more rational decision-making, will produce better regulations, and will promote good governance.

I made a similar point in a recent paper about the federal financial regulators' failure to use economic analysis. Economic analysis is not, I explained, a burden, but an important tool for regulators to think about and convey to the president, Congress, and the public the problems regulators are trying to solve, the alternative solutions they are considering, the costs that society will bear under each alternative, and the benefits society can expect to enjoy as a result of regulatory actions.