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To summarize and explain the U.S. Commodity Futures Trading Commission’s (CFTC’s) guidance regarding whether cryptocurrency is subject to CFTC jurisdiction.

The article reviews the CFTC’s March 24, 2020 final interpretive guidance, summarizes the history of the agency’s jurisdiction over leveraged, margined or financed retail transactions, and relates it to the CFTC’s guidance and judicial decisions regarding cryptocurrency.

We found that the CFTC, in carrying out its leadership role related to developments in the fintech industry, had provided clarity about its jurisdiction over cryptocurrency. The CFTC defines virtual currency as a “commodity,” even if intangible, and finds that many transactions in virtual currency satisfy the exception to the CFTC’s jurisdiction over leveraged retail commodity transactions because “delivery” can be said to occur within 28 days.

The article provides a useful summary of an important pronouncement from the CFTC in a manner that is readily understandable and relatable to industry participants and legal practitioners in this field.

To summarize for registered broker-dealers and their customers upcoming margin requirements for “to-be-announced” (TBA) transactions on mortgage-backed securities pursuant to recently-amended FINRA Rule 4210.

This article explains the various margin requirements that are expected to come into effect on June 25, 2018. A chart summarizing the applicability of margin requirements for various types of accounts is also provided. Additionally, the article addresses practical steps to bring Master Securities Forward Transaction Agreements (“MSFTAs”) governing relevant transactions into compliance with the amended rules.

The compliance date for margining under FINRA Rule 4210 is approaching. Broker-dealers will be required to collect (but not post) daily variation margin and, depending on the type of account, maintenance margin, from their customers on specified transactions. Broker-dealers should become familiar with the relevant requirements in order to amend (or enter into new) MSFTAs by the deadline. Customers also should become familiar with, and consider the implications of, these margin requirements.

Concisely summarizes and explains the key requirements and provides practical guidance regarding compliance from experienced derivatives attorneys.

The US Commodity Futures Trading Commission (CFTC), to date, has not directly addressed how liability for Commodity Exchange Act (CEA) violations involving blockchain or distributed ledger technology should be allocated among the various parties involved in the distributed ledger network, such as the network itself, persons running consensus nodes, developers building applications on the platform, and businesses and end users using such applications. This article discusses recent statements by CFTC Commissioner Brian Quintenz regarding this issue and the approach that the CFTC may take going forward.

This article examines the allocation of liability in the context of smart contracts that may violate the CEA. The article discusses how the CFTC, despite its significant focus in recent years on virtual currency and blockchain, has not addressed the issue of liability allocation directly. Recent remarks by Commissioner Quintenz may shed light on the CFTC’s future approach.

This article finds that liability allocation questions may become increasingly pressing as smart contracts that potentially violate the CEA proliferate, possibly exposing a broad range of parties involved in a distributed ledger network to liability. To the extent that Commissioner Quintenz’s recent remarks are indicative, the CFTC ultimately may adopt a foreseeability standard in determining liability.

Applications of distributed ledger technology (DLT) are ever-expanding, continually posing novel CFTC regulatory issues. This is especially the case with respect to smart contracts that may be subject to CFTC jurisdiction. Parties involved in such applications should be mindful of potential liability.

Practical guidance from experienced finance and derivatives lawyers with strong CFTC expertise.