The proposed interpretation would further clarify the CFTC’s jurisdiction over virtual currency platforms that facilitate retail commodity transactions.

On December 15, 2017, the US Commodity Futures Trading Commission (CFTC) issued a proposed interpretation for the term “actual delivery” as applied to retail commodity transactions involving virtual currencies (Proposed Interpretation). Under Section 2(c)(2)(D) of the Commodity Exchange Act (the Retail Commodity Rules), commodity transactions (i) between persons that are not eligible contract participants (ECPs) and (ii) that are margined, financed, or leveraged (retail commodity transactions) are subject to regulation by the CFTC as if they were futures contracts, unless there is actual delivery of the underlying commodity within 28 days. While the Proposed Interpretation, if finalized, would have significant implications for virtual currency and token trading platforms offering commodity transactions on a financed basis, the proposal leaves important questions unanswered, with the CFTC pivoting to the market for feedback.