The U.S. Commodity Futures Trading Commission (CFTC) published its final guidance on "actual delivery for digital assets" Tuesday, seemingly settling a longstanding question on when a cryptocurrency can be "delivered" from one party to another.
The CFTC shared a 35-page document stating that in its view, "actual delivery" occurs when a customer has complete control over the asset and the offeror no longer has any control over the asset by the end of 28 days after the transaction. The publication comes following several years of public input from exchanges and other stakeholders.
The regulator approved the draft on March 23, according to the document.
How "actual delivery" is defined has long been an open question. In 2016, law firm Steptoe & Johnson LLP petitioned the CFTC after the federal commodities regulator settled charges with crypto exchange Bitfinex on trading violation allegations.
The charges stemmed from CFTC allegations that Bitfinex maintained control over cryptocurrency private keys after delivering funds tied to margin trading, and therefore the funds weren't actually delivered. The charges were settled, with Bitfinex paying $75,000.
Steptoe filed a petition shortly after, claiming the settlement did not provide any clarity to what "actual delivery" looked like. The petition argued that the definition of custody was unclear, which could be harmful to the crypto industry.
Tuesday's filing might settle some of this gray area.
"However, the Commission notes that it does not intend to create a bright line definition given the evolving nature of the commodity and, in some instances, its underlying public distributed ledger technology," today's document said.
CFTC Chairman Heath Tarbert said in a statement he does not believe the agency will conduct enforcement actions for the next 90 days around potential delivery violations to "prevent any potential market disruptions" as firms abide by the new guidance.
According to Tuesday's document, the CFTC defines "actual delivery" as having occurred when:
"(1) A customer secures: (i) possession and control of the entire quantity of the commodity, whether it was purchased on margin, or using leverage, or any other financing arrangement, and (ii) the ability to use the entire quantity of the commodity freely in commerce (away from any particular execution venue) no later than 28 days from the date of the transaction and at all times thereafter; 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) 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."
Read the full document below:
Disclosure Read More
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.