U.S. CFTC Okays Final Interpretive Guidance for Physical Delivery of Traded Crypto

US CFTC Okays Final Interpretive Guidance for Physical Delivery of Traded Crypto

The U.S. Commodity Futures Trading Commission (CFTC), has publicized clarity regarding the delivery of physical digital assets as it applies to traded products on the market.

“The Commodity Futures Trading Commission today announced the Commission voted unanimously to approve final interpretive guidance concerning retail commodity transactions involving certain digital assets,” the Commission said in a statement, adding:

“Specifically, the guidance clarifies the CFTC’s views regarding the ‘actual delivery’ exception to Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) in the context of digital assets that serve as a medium of exchange, colloquially known as ‘virtual currencies.’”

Commodities Trading Involves Physical Delivery

When participants trad futures in traditional markets, they bet on the future price action of an underlying asset. If they hold those futures all the way through settlement, they will end up receiving the underlying asset, delivered to them physically.

The CFTC’s new clarity implies a physical delivery deadline of 28 days, allowing the purchaser to use their purchased digital assets after that period.

The new guidance includes a person who holds or controls such a commodity, purchased through leverage trading or other methods. He or she has “the ability to use the entire quantity of the commodity freely in commerce (away from any particular execution venue) no later than 28 days from the date of the transaction and at all times thereafter,” the Commision said.

The CFTC included that neither the selling party nor the facilitator retained ownership. The panel explained:

“The offeror and counterparty seller (including any of their respective affiliates or other persons acting in concert with the offeror or counterparty seller on a similar basis) do not retain any interest in, legal right, or control over any of the commodity purchased on margin, leverage, or other financing arrangement at the expiration of 28 days from the date of the transaction.”

Continued clarity from the CFTC shows the prevalence in the mainstream world of digital asset trading, spurring responsive regulatory guidance. Just this January, the Chicago Mercantile Exchange, or CME, started trading options for bitcoin. After the outfit launched BTC futures in 2017, such a product launch demonstrated continued demand for Bitcoin trading.

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