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ARTICLE · 17 MAY 2019

Commodity Exchange Act Liability For Smart Contract Coders

Skadden, Arps, Slate, Meagher & Flom LLP
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The Commodity Futures Trading Commission (CFTC) is considering how smart contract applications on the blockchain implicate its jurisdiction and enforcement authority.

United KingdomFinance and Banking
Jonathan Marcus
Jonathan Marcus
Daniel B. O'Connell
Daniel B. O'Connell
Stuart D. Levi
Stuart D. Levi
Trevor A. Levine
Trevor A. Levine

The Commodity Futures Trading Commission (CFTC) is considering how smart contract applications on the blockchain implicate its jurisdiction and enforcement authority. Smart contracts are pieces of code on a blockchain that execute certain steps (such as moving a cryptocurrency from one wallet to another) when a condition or set of conditions is met. They are not "contracts" in the traditional legal sense, nor are they "smart" in the sense of using artificial intelligence or similar technologies.

In October 2018, CFTC Commissioner Brian Quintenz discussed at the GITEX Technology Week Conference how the existing Commodity Exchange Act (CEA) regulatory framework may apply to this new technology. If the CFTC determines that smart contracts that execute on a blockchain facilitate trading in off-exchange futures, swaps with retail customers or event contracts the agency deems contrary to the public interest, how will it approach enforcement? While Quintenz addressed this

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