July 27, 2021

Volume XI, Number 208


July 26, 2021

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CFTC Issues Final Interpretive Guidance on Actual Delivery for Digital Assets

On March 24, the Commodity Futures Trading Commission (CFTC) issued final interpretive guidance regarding retail commodity transactions that involve digital assets. The interpretive guidance is designed to clarify the CFTC’s views on the “actual delivery” exception to Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) for digital assets that serve as a medium of exchange (otherwise known as “virtual currencies”).

Section 2(c)(2)(D) of the CEA effectively prohibits commodity transactions involving retail clients that are entered into on a leveraged or margined basis other than transactions entered into on or subject to the rules of a licensed futures exchange, unless such transaction results in “actual delivery” within 28 days from the transaction date.

The CFTC’s guidance elaborates on two primary factors that demonstrate the “actual delivery” of virtual currency retail commodity transactions:

  1. no later than 28 days from the date of the transaction and at all times thereafter, a customer: (a) must secure possession and control of the entire quantity of the commodity, whether it was purchased on margin, or using leverage, or any other financing arrangement; and (b) must have the ability to use the entire quantity of the commodity freely in commerce (away from any particular execution venue); and

  2. 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) may 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.

The CFTC’s guidance is not intended to inhibit any particular activity but rather to clarify when certain activity is subject to the regulatory provisions made applicable by CEA section 2(c)(2)(D).

More information is available here.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 87

About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.


Laura Krcmaric, Financial Services Attorney, Katten Law Firm

Laura Krcmaric represents clients in the financial services industry, focusing on regulatory and compliance work. Prior to joining Katten, Laura served as counsel for Credit Suisse, where she provided advice to the private banking and wealth management division. She also was an honors intern with the Securities and Exchange Commission.

While in law school, Laura served as a staff member and symposium editor for the North Carolina Law Review. She also was a member of the Community Development Law Clinic, representing nonprofit organizations.