CFTC Withdraws Guidance on Voluntary Carbon Credit Derivatives

The CFTC withdrew final guidance on the listing of voluntary carbon credit ("VCC") derivatives contracts by designated contract markets ("DCMs").

The October 2024 guidance was intended to clarify how existing Commodity Exchange Act provisions and CFTC regulations in Parts 38 ("Designated Contract Markets") and 40 ("Provisions common to Registered Entities") apply to VCC derivatives. In the now withdrawn guidance, the CFTC outlined factors DCMs should consider when designing and listing VCC contracts, with the goal of supporting standardization, transparency, and liquidity in these markets. (See related coverage.)

In the withdrawal notice, the CFTC determined that the guidance was unnecessary because it was non-binding, created no new compliance obligations, and added little value beyond the existing regulatory framework. The CFTC explained that VCC contracts should instead be reviewed under the same standards as all other derivatives. The CFTC emphasized that applying a uniform approach under the rules prevents confusion and best promotes transparency, fairness, and market integrity.