After reviewing the variety of comments received and further considering the retail customer concerns at issue, the Commodity Futures Trading Commission believes it has struck “a balance” in its final guidance for what constitutes actual delivery.
Primarily, the Commission generally believes the two central tenets of actual delivery are demonstrated when there is (i) a transfer of the virtual currency (that is the subject of the transaction) away from the counterparty seller, offeror, and any offeror execution venue ledger or digital account system and (ii) receipt by a separate blockchain address or depository that is chosen by the customer and allows the customer to use the virtual currency freely in commerce, where accepted, as soon as technologically practicable.
Actual delivery may be found to have occurred even if there is some level of offeror affiliation with a depository that is a separate, independent legal entity, so long as there are certain safeguards to ensure that the customer receives actual possession and control over the purchased commodity within the 28-day actual delivery period.
The Commission believes that, in the context of virtual currency, such a transfer of the commodity to a separate entity from the offeror and the offeror’s execution venue, when applicable, establishes that a customer achieves meaningful possession and control, including the ability to use the virtual currency as a medium of exchange at any time. The Commission is not alone in treating such a demonstration as critical when such a transaction, bearing hallmarks of a derivative, would otherwise be conducted in an unregulated capacity.
“Providing clarity to market participants is one of the CFTC’s core values,” said CFTC Chairman Heath Tarbert, in a statement.“ This interpretive guidance not only fulfills that commitment, but it reflects my belief that the US must be a leader in the digital asset space. These efforts are also especially critical when the hard-earned income of everyday Americans is at stake. Under my leadership, the CFTC will continue to do its part to encourage responsible fintech innovation through sound regulation.”