CFTC Regulation of cryptocurrencies as "commodities"

Abstract

This chapter relates how Congress granted the CFTC exclusive jurisdiction over the regulation of commodity futures contracts. Excluded from the CFTC’s regulatory authority were “spot” market contracts that call for the “actual delivery” of a commodity. This chapter describes the historical background and application of the actual delivery exclusion. It addresses Supreme Court cases dating back to the nineteenth century that used the actual delivery concept to determine whether futures contracts were subject to state anti-gambling laws. This chapter then describes the CFTC’s decades long battles over whether it was excluded by the actual delivery exclusion from regulating leveraged contracts in foreign currency, energy products, swaps, precious metals and “hedge-to-arrive” contracts. It then addresses the application of the actual delivery exclusion to cryptocurrencies and analyzes the CFTC’s enforcement cases that are seeking to regulate the cryptocurrency market despite that exclusion.