CFTC regtech implications for virtual currency trading

Laura Harper Powell and Bruce Tupper

This chapter will assess the regulatory impact of final interpretive guidance issued by the US Commodity Futures Trading Commission (CFTC) on June 24, 2020, on “Retail Commodity Transactions Involving Certain Digital Assets” (hereafter Final CFTC Guidance).¹¹ Final CFTC Guidance: 85 Fed. Reg. 37734. In its Final CFTC Guidance, the CFTC clarified and formalised its view that actual delivery has occurred when the retail customer who purchased virtual currency on margin or leverage has achieved a meaningful degree of both possession and control over all of the virtual currency that is underlying the transaction no later than 28 days from the transaction date.²² Final CFTC Guidance: 85 Fed. Reg. at 37738. The discussion then moves onto the implications of the Final CFTC Guidance for virtual currency trading platforms that offer, or may wish to offer, the use of margin and leverage by retail customers. The chapter highlights the potential opportunity and need for regulatory technology (regtech) tools, such as a registered virtual currency repository, to facilitate market supervision and compliance with the CFTC’s 28-day actual delivery requirements.

CFTC definition of virtual