The US Commodity Futures Trading Commission (CFTC) has published a proposal containing its interpretation. Besides, the view of its authority over cryptocurrency-related retail commodity transactions.
According to their interpretation of the existing Commodity Exchange Act, contracts of sale that result in “actual delivery”. It’s within 28 days from the transaction date are exempt by Commodity Exchange Act. Since direct oversight authority as “retail commodity transactions.”
The new proposal establishes two primary factors necessary to demonstrate “actual delivery” of retail commodity transactions in virtual currency. In other words, these are the factors to be checked if the cryptocurrency is to be considered “delivered”.
“(1) a customer having the ability to: (i) take possession and control of the entire quantity of the commodity. Whether it was purchasing on margin, or using leverage, or any other financing arrangement. (ii) use it freely in commerce (both within and away from any particular platform) no later than 28 days from the date of the transaction; 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) not retaining any interest in or control over any of the commodity purchases on margin, leverage, or other financing arrangement at the expiration of 28 days from the date of the transaction.”
The commission now invites the public to comment on the Proposed Interpretation for 90 days from publication in the Federal Register.
They say the current act gives the commission an oversight authority over “retail commodity transactions”. Else agreements, contracts or transactions entered into or offered to customers in the market. Thus, on a leveraged or margined basis, or financed by the offeror, the counterparty or a person acting in concert. Along with the offeror or counterparty on a similar basis. These are treating as if they were commodity futures.
The announcement follows the introduction of Bitcoin futures by CBOE last Saturday and today’s introduction by CME. The market will also witness a launch of futures by TD Ameritrade.
The commission said in October that it would consider the issues in light of the prevailing lack of clarity since 2015. Conceivably, the process was triggered in part by a $75000 charge issued to Bitfinex exchange.