Crypto Margin Trading Challenged By US Derivatives Regulator (bloomberg.com) 10
The main U.S. derivatives regulator is taking a significant step in defining the sometimes blurry line between cryptocurrency futures and trading in the spot market. From a report: The Commodity Futures Trading Commission this week laid out its view on what it means to take "actual delivery" of a digital asset. The long-awaited guidance is significant because it means that there could be penalties for trades that don't let the buyer take physical possession and control of a coin within 28 days -- the cut off line for when trades in commodities like wheat and oil start to be considered futures contracts. Long-existing rules requiring traders and exchanges to be able to deliver physical commodities unless they're futures trading on a CFTC-regulated exchange has sowed some confusion for Bitcoin, Ether and other digital assets because they exist only in cyberspace. The issue has been further complicated by trading platforms allowing investors to leverage their bets multiple times using margin, or borrowed money.
"physical posession" (Score:1)
I know we're living in a world of Content Mafia delusion, but ... how does that even apply?
If anything, a Bitcoin changes "ownership" because everyone agrees to it, by accepting the same blockchain. Which is completely meaningless, if somebody persuades the majority, that the transfer was invalid. E.g. by saying somebody "hacked" something.
Nothing ever changes hands. It's only a mind game.
That is OK, by itself. But you can clearly not apply the concept of physical posession here. Not even Stretch Armstrong
Re: (Score:2)
From TFA:
“In its simplest form, actual delivery of virtual currency connotes the ability of a purchaser to utilize the virtual currency purchased ‘on the spot’ as a medium of exchange in commerce or within the entirety of its relevant blockchain ecosystem,” the CFTC said. “The Commission believes that, in the context of an ‘actual delivery’ determination in virtual currency, physical settlement involving the entire amount of purchased commodity must occur.”
Spe
Re: "physical posession" (Score:2)
Wonder how multi-sig fits into that. If I give half my key to my good friend, I've not taken delivery until my good friend and I concurrently decide to spend.
Re: (Score:2)
So do I understand what a derivative actually is? (Score:3)
A bond would basically be like loaning money to a horse owner who agrees to pay you back regardless of if his horse ever wins a race
Stock is partial ownership on a horse and if the horse wins a race you might get some of the money or if the horse goes up in price you can make money that way
A derivative is basically just betting on the horses.
Re: (Score:2)
It's easiest to talk about "put" options. A put is simply insurance against the price falling. As the market collapsed due to the Chinese Corona Virus panic, I was able to hedge my investments and so they only fell about half as much as they otherwise would have. That's very useful, as you can see.
So, why was someone willing to sell me that contract? Let's look at put option from the other side. Let's say you don't want more BTC at its current price of over $6600, but at $4000 you'd definitely buy more
CANNABISCURE (Score:1)