By Andrew P. Cross, Laurie Rosini, and Thomas Ahmadifar
On December 15, 2017, the U.S. Commodity Futures Trading Commission (the “CFTC”) issued a proposed interpretation of the term “actual delivery” as used in the provision of the Commodity Exchange Act (the “CEA”) that grants the CFTC explicit authority to oversee the marketplace for “retail commodity transactions.” This is the second blog posting in a multi-part series (read Part 1 here) that will explore the regulation of retail commodity transactions and the CFTC’s recent proposed interpretation (the “Proposed Interpretation”), the issuance of which we believe represents a potentially significant milestone in the regulation of virtual currency transactions. We continue our series with an examination of the Proposed Interpretation and its examples for what may constitute “actual delivery” of virtual currency.
Retail Commodity Transactions under Section 2(c)(2)(D)
As we explain in greater detail in Part 1, the CFTC has exclusive jurisdiction over the marketplace for “retail commodity transactions,” arrangements that Section 2(c)(2)(D) of the CEA describes as an agreement, contract, or transaction that is offered or entered into by a party:
- On a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis; and
- To or with persons who do not qualify as either an eligible contract participant (“ECP”) or an eligible commercial entity (“ECE”).