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By: Andrew Schaffer, Timothy Spangler, Audrey Wagner, Nicholas C.D. Ward, Dechert

The Commodity Futures Trading Commission published in the Federal Register on June 24, 2020 its final interpretive guidance concerning retail commodity transactions involving certain digital assets (2020 Guidance). The 2020 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." The actual delivery determination is important because it delineates the virtual currencies over which the CFTC has full regulatory jurisdiction and those over which the CFTC merely has anti-fraud and market manipulation jurisdiction.

The 2020 Guidance explains that transactions in virtual currencies with "retail customers" conducted with margin, leverage or other financing must be traded on a CFTC-licensed futures exchange, unless: the virtual currency is free of any liens, other interests or legal rights of the offeror or seller; and the purchaser has full control of the virtual currency within 28 days of the transaction.

The 2020 Guidance took effect as of the date of its publication in the Federal Register. However, CFTC Chairman Heath P. Tarbert noted in his statement in support of the 2020 Guidance at the CFTC open meeting where it was approved unanimously that, to help maintain orderly and liquid digital asset mar......................

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