US Regulator Releases New Regulations Ahead Of CME Bitcoin Futures Launch


The CFTC released a new set of regulation and launched a website entirely dedicated to cryptocurrency just before CME Group is expected to launch their bitcoin futures trading option.

The regulating agency, the Commodity Futures Trading Commission (CFTC), demonstrated a surge of activity on the last business day before one of the world’s biggest exchange platforms, the Chicago Mercantile Exchange (CME) Group, is expected to launch theirbitcoin futures contracts. The regulating body established an entire website dedicated to bitcoin and released a new set of cryptocurrency-related regulations for public comment.

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According to the regulating agency’s released statement, pr7664-17, the Proposed Interpretation n Virtual Currency “Actual Delivery” in Retail Transactions, addresses all retail commodity transactions using cryptocurrency such as bitcoin. In addition, the CFTC states that they consider that the ‘actual delivery’ exception is applicable to transactions conducted in cryptocurrency.

Previously, the CFTC considered bitcoin and other cryptocurrencies as commodities as per the Commodity Exchange Act (CEA). However, the CFTC has noted that they will review bitcoin’s status, especially in terms of the market makers definitions, now that prominent exchanges such as CME Group, Cboe, Cantor Fitzgerald, and Nasdaq are all implementing bitcoin futures contracts on their exchange in order to meet the increasing public demand for the product. Essentially the CFTC uses the CEA as its legislative framework, which has also enabled it to monitor the cryptocurrency futures products from a retail perspective.

The newly proposed set of regulations that was introduced on December 15, will exempt contracts provided that they are delivered within a period of 28 days. According to the agency, the retail commodity in question needs to adhere to two important factors before it can be eligible for “actual delivery” status. Firstly, the individual in question must own and have control rights over the entire amount of commodity, despite the finance arrangements. Secondly, the individual must have the capability of using the commodity freely within the commercial sphere within 28 days from the initial transaction date.

According to the CFTC, all affected parties are allowed to express their thoughts and opinions regarding the new proposal in the next three months. The proposal includes another regulation which states that the seller, or any party affiliated with the seller or acting on the seller’s behalf, may not retain any interest or exercise any control over the sold commodity, despite the financial transaction, after the 28-day period from the initial transaction has expired.

The media outlet, Reuters, has reported that this latest regulation proposal has likely been drafted in order to address the so-called bucket shops that mislead retail investors into investing in a cryptocurrency, but pockets their money without actually having invested it on the investor’s behalf.

In addition, the CFTC has also created a website that is entirely devoted to bitcoin. The website that was launched last week Friday, has been established with the goal to provide an online resource of information and guidance to all crypto market participants. The website also outlines the role and jurisdiction of the CFTC in the industry.

The agency has also recently introduced a podcast dedicated to financial regulation, called CFTC Talks. Their very first episode featured a roundtable of high-profile CFTC directors that frankly discussed bitcoin futures and the regulatory challenges that the agency might face in the future.

The website includes several resources including a document that explains the risk of the cryptocurrency market. The website also features a document dedicated to explaining the hacks and scams in the industry.

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