The CFTC said in a notice that it needed to reevaluate the guidance to consider developments over the past five years.
Crypto News
The U.S. Commodity Futures Trading Commission has withdrawn its "actual delivery" guidance for cryptocurrency transactions, a move industry observers say provides significantly more operational flexibility for digital asset exchanges.
Acting Chairman Caroline Pham announced Thursday the elimination of what she called "outdated and overly complex guidance that penalizes the crypto industry and stifles innovation." The decision aligns with the administration's objectives for the current year, Pham stated.
The original guidance finalized in March 2020 defined when "actual delivery" of crypto occurred in commodity transactions. The CFTC said in a notice that it needed to reevaluate the guidance to consider developments over the past five years. The agency under Pham has pursued a more crypto-friendly regulatory approach.
Pham said the withdrawal followed recommendations from the president's crypto working group. The group suggested the CFTC release guidance on how crypto may be considered commodities and expand prior guidance regarding actual delivery of virtual assets.
StarkWare General Counsel Katherine Kirkpatrick Bos praised the move, explaining that the previous guidance made it harder for exchanges to offer margin or leverage unless actual delivery occurred within 28 days. "This offers way more flexibility for exchanges," she stated. "But PSA - this isn't law! Just guidance. All of this can be changed again should leadership change."
The CFTC can issue guidance to clarify its interpretation of legislation and provide insight into enforcement approaches for certain situations. However, guidance is not legally binding in the same way as formal regulation.
Garry Krugljakow, head of Bitcoin strategy at Berlin-based Bitcoin treasury company aifinyo AG, speculated in a Thursday post the move signals what's ahead. "This move signals two things: cleaner jurisdiction for the CFTC and a regulatory path designed for scale, not hesitation," he said. Krugljakow added that actual delivery made sense in 2020 but not in a world of real custody, collateralization, and Bitcoin-backed credit.
Todd Phillips, a fellow at the American think tank the Roosevelt Institute, said the definition of actual delivery is important as it decides which exchanges need to register with the CFTC and which don't. "The CFTC replaced the prior guidance with nothing," he stated. "Right now, we have no idea what the CFTC thinks actual delivery means, or who has to register."
The withdrawal creates regulatory uncertainty around registration requirements while providing exchanges with operational freedom. Industry participants now await new guidance clarifying the CFTC's current interpretation of actual delivery for cryptocurrency transactions and which entities fall under its registration requirements.
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