Today, Steptoe & Johnson LLP’s Blockchain and Digital Currency practice applauded the Commodity Futures Trading Commission’s (CFTC) decision to propose, through the rulemaking process, an interpretation defining the term “actual delivery” in the context of retail commodity transactions involving cryptocurrencies like Bitcoin.
“We are pleased that the commission has chosen to respond to Steptoe’s petition for rulemaking, along with other requests for guidance, by proceeding in this manner,” said Micah Green, chair of Steptoe’s Financial Services practice and co-head of Steptoe’s Government Affairs and Public Policy Group. “We look forward to reviewing the proposal and working together with the industry to find the right approach for businesses that handle, trade, and exchange cryptocurrency.”
In July of 2016, Steptoe filed its petition requesting that the CFTC proceed with a rulemaking on this subject rather than continued enforcement actions, so that there would be visibility to the industry and an opportunity for the industry to comment and participate in the process. Specifically, the petition called for a commission rulemaking to set forth the requirements for effectuating a transfer of ownership under the Commodity Exchange Act (CEA). Under the CEA, retail commodity transactions within the terms and intent of such provision are required to be traded on a commission-regulated exchange, unless the transaction falls within one of the stated exceptions, such as a transaction that results in “actual delivery” of a commodity within 28 days. Accordingly, the petition also requested that a CFTC rulemaking outline the elements necessary to satisfy the requirements of “actual delivery” under the CEA as applied to leveraged or financed retail cryptocurrency transactions.
“Cryptocurrency and crypto-assets represent a new asset class, and we applaud the CFTC and other regulatory agencies who have chosen to evaluate their approach to innovation and investor protection to make sure it fits with this new type of asset,” said Jason Weinstein, co-chair of Steptoe’s Blockchain and Digital Currency practice.
Steptoe is among the leaders in the evolving legal and regulatory landscape surrounding blockchain technology and digital currency. The firm’s multidisciplinary, global practice features experience in a range of disciplines that will be impacted by blockchain technology in the coming years – including corporate and fund formation, financial services, international regulation and compliance, trade, IP, government contracts, public policy, tax, cyber, and government investigations and enforcement. Steptoe helped create and serves as counsel to the Blockchain Alliance and the Digital Assets Tax Policy Coalition. The firm also serves as the legal services partner of the Global Blockchain Business Council, and as an advisor to industry-leading advocacy groups Coin Center and the Chamber of Digital Commerce. The firm’s Blockchain and Digital Currency practice has advised venture capital firms, financial institutions, established companies, startups, and governments on issues surrounding digital currencies and blockchain technology.