Digital Assets: CFTC Clarifies Definition of “Actual Delivery” in Crypto Trades

March 25, 2020 | Digital Assets, News

Companies have 90 days to implement the new guideline around delivery.

The U.S. Commodity Futures Trading Commission (CFTC) has finally shed light on a vexed question. What constitutes “actual delivery” of digital assets during their trade? (COIN TELEGRAPH)

In a unanimous decision, the Commission cleared its interpretation of delivery as applied to retail commodity transactions involving digital currencies.

In sum, it said that “actual delivery” occurs when a customer has complete control over the asset and the offeror has relinquished all control over the asset by the end of 28 days after the transaction.

The clarification has been hanging fire for some years. Controversy surrounded the modality of defining a physical delivery for a virtual asset.

Actual delivery per CFTC

The CFTC deemed that an “actual delivery” occurs when:

“(1) A customer secures: (i) 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 (ii) 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; 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) do not retain any interest in, legal right, or control over any of the commodity purchased on margin, leverage, or other financing arrangements at the expiration of 28 days from the date of the transaction.”

“Our action provides long-awaited guidance to trading platforms, custodians, and other key market infrastructures and participants regarding those digital assets that are both “commodities” under U.S. law and traded via leverage provided by the counterparty or trading platform,” said CFTC Chairman Heath P. Tarbert in a statement.

Related Story:   CFTC Chairman: Ethereum is a Commodity                                                

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