US UFTC Publicized Clarity On Physical Delivery of Traded Crypto

By Robin Wong | March 25, 2020
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The US CFTC has reportedly provided regulatory parameters on physical digital asset delivery, since its scope also covers traded market products. 

Specifically, as revealed by the CFTC itself, a poll has been conducted within the Commission, and it has approved of the final version of the interpretive guidance, regarding retail commodity transactions associated with some particular types of crypto assets. 

“Specifically, the guidance clarifies the CFTC’s views regarding the ‘actual delivery’ exception to Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) in the context of digital assets that serve as a medium of exchange, colloquially known as ‘virtual currencies.’”

In traditional markets, when trading activities of futures take place, the underlying asset is the receiving end of the bets made upon the future price action. If the futures are in their possession through to the final settlement step, they will receive said underlying asset, transferred to them in a physical manner. 

A deadline, which lasts for 28 days, will be established with the arrival of the new CFTC initiative for physical delivery, enabling purchaser to freely conduct activities regarding the digital asset they bought, after that timeframe. 

“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 arrangement at the expiration of 28 days from the date of the transaction.” The guideline further read.

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