Re:SEC charges Ripple and two executives
by Animats on Wednesday December 23, 2020 @12:57AM
(#25514839)
Sorry, CFTC, not SEC. Here's the actual rule.[1] This refers to "delivery" when the futures contract is closed out, not while it is pending.
This follows the procedure for physical commodities, like grain. A key point there is that the organization storing the grain is totally separate from the trading process. What you're trading is a warehouse receipt for grain in a grain elevator somewhere. You can "take delivery" by getting the warehouse receipt and starting to pay storage charges. At that point your broker no longer has access to the asset. Eventually someone buys it who actually intends to use it, and they have it loaded onto a train or truck.
The key point here is separation between the broker, exchange, and storage facility. Cryptocurrencies use cryptographic wallets instead of warehouses, so "delivery" means delivery to the user's wallet.
This follows the procedure for physical commodities, like grain. A key point there is that the organization storing the grain is totally separate from the trading process. What you're trading is a warehouse receipt for grain in a grain elevator somewhere. You can "take delivery" by getting the warehouse receipt and starting to pay storage charges. At that point your broker no longer has access to the asset. Eventually someone buys it who actually intends to use it, and they have it loaded onto a train or truck.
The key point here is separation between the broker, exchange, and storage facility. Cryptocurrencies use cryptographic wallets instead of warehouses, so "delivery" means delivery to the user's wallet.
[1] https://www.cftc.gov/PressRoom/PressReleases/8139-20