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The CFTC's Final Guidance on Actual Delivery: Five Things to Know

April 6, 2020, Covington Alert

On March 24, 2020, the CFTC unanimously voted to adopt final interpretive guidance on when “actual delivery” of retail commodity transactions in virtual currencies occurs within the meaning of Section 2(c)(2)(D) of the Commodities Exchange Act, making them eligible to meet the exception from regulation as a futures contract. The CFTC previously published interpretive guidance in 2013 on the meaning of “actual delivery” for traditional commodities. With the increase in recent years of trading in cryptocurrencies and other virtual currencies, the CFTC has attempted to formulate an appropriate regulatory framework to delineate when actual delivery occurs for retail commodity transactions of in the cryptocurrency markets. In 2017, it sought public input through proposed guidance. The recent adoption of final guidance builds off of the 2017 proposed guidance and public comments to provide greater clarity on the applicability of the “actual delivery” exception to retail transactions in virtual currency.

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