The National Futures Association ("NFA") commented on the CFTC's proposed interpretation of the term "actual delivery" in relation to retail commodity transactions involving virtual currency (see previous coverage). The NFA encouraged the CFTC to consider, among other suggestions, reducing the time period permitted for the actual delivery of virtual currency products.
The proposed CFTC interpretation addresses "actual delivery" as defined in CEA Section 2(c)(2)(D)(ii)(III)(aa). The NFA stated that leveraged transactions in any commodity involving virtual currency "should be subject to the [CFTC's] existing regulatory framework and, where appropriate, treated as futures contracts."
In calling for the CFTC to consider shortening the 28-day time period for the actual delivery of virtual currency products, the NFA warned that such products are offered for "speculative investment purposes." Due to the extreme volatility of these products, coupled with their rising popularity among retail participants, they pose significant potential risks to customers. By shortening the timeframe permitted for delivery, the NFA maintained, the CFTC would be able to regulate leveraged virtual currency products under existing comprehensive regulatory oversight programs.
The NFA also expressed support for the CFTC's proposed interpretation that "actual delivery" means a customer obtains possession and control and can use virtual currency freely without the offeror or counterparty seller retaining interest or control. The NFA warned, however, that certain virtual currency exchanges may not be subject to adequate regulatory scrutiny. The NFA encouraged the CFTC to clarify how the proposed interpretation of actual delivery would impact the operations of exchanges.
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