- The Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (the CEA) had filed final interpretive regulations for the ‘actual delivery’ exception to digital assets.
- The Interpretative Guidance is another effort of the CFTC to make all its regulations and guidelines over digital currencies clear.
The Commodity Futures Trading Commission CFTC under the Commodity Exchange Act (the CEA) had filed long-awaited final interpretive regulations for the ‘actual delivery’ exception to retail commodity transactions involving digital assets or cryptocurrency. Recently, on June 24, 2020, the above Final Interpretive Guidance became effective.
The Commodity Futures Trading Commission (CFTC), a US-based federal agency which is independent of any higher authorities. It was set up by the Commodity Futures Trading Commission of 1974. The main aim of the CFTC is to focus on the future of the products and marketing options. It widely promotes the competitiveness and efficiency of the futures markets and provides protection to the traders against the scams, frauds, and so on.
What did the Interpretive Guidance mean to describe?
The Commission will look after while determining whether an ‘actual delivery’ has occurred or not for the main purpose of a key exemption from the CEA. This allowed users to leveraged retail product transactions. In short, this particular interpretive guidance was a way to once again clarify guidelines over the transactions of the cryptocurrency. The Final Guidance is an updated version of the Proposed Interpretation of 2017 with some considerable adjustments.
A Timeline of the Events Addressed by the CFTC
In 2010, the CFTC addressed some judicial doubts with regard to some leveraged retail raw materials or commodity transactions.
In 2013, it released another guidance to ascertain the meaning of ‘actual delivery’ used in CEA Section 2(c)(2)(D). Specifically, the involved transfers of the title as well as the ownership of the commodities to the purchaser were examples of ‘actual delivery’.
Again in 2015, it acknowledged that cryptocurrencies like Bitcoin are a source for the purposes of the Commission Exchange Act. Also, they said that virtual currencies required some added legislation with regards to the CEA Section 2(c)(2)(D). Consequently, it released a proposal an interpretation meant specifically for virtual currencies of the ‘actual delivery’ exception to retail commodity transaction treatment.
A Step Towards the Clarification of its Jurisdiction Over Cryptocurrency
The Interpretative Guidance is another effort of the CFTC to make all its regulations and guidelines over digital currencies clear. This interpretation, instead of the need to require total independence of any depository, enables all the offered affiliated institutions as long as they are independently licensed entities approved as a customer’s agent.