Withdrawal of CFTC Staff Guidance on Virtual Carbon Credits
Legal Alert
Baker Donelson (original publication)
By Paul Turner and Peyton Lacoste
November 6, 2024
The Commodity Futures Trading Commission (CFTC) withdrew its guidance on the listing of voluntary carbon credit derivative contracts (VCCs) on September 10, 2025. The decision marks a shift in the regulatory landscape for environmental commodities and removes a tailored framework that was intended to address perceived manipulation risk in this asset class.
The withdrawn guidance aimed to promote transparency, comparability, and environmental integrity, and it encouraged adoption of industry standards in contract terms. With the withdrawal, exchanges and market participants rely solely on the existing “Uniform Framework” under Section 5c of the Commodity Exchange Act and CFTC Regulations in Parts 38 and 40.
The CFTC stated that the Uniform Framework already provides sufficient structure for listing VCCs by designated contract markets and swap execution facilities, and that narrow VCC-specific guidance could cause confusion or inconsistent application of general rules.
In practical terms, DCMs and market participants should expect continued focus on Core Principles 3 (contracts not readily susceptible to manipulation) and 4 (effective surveillance and prevention of price distortion). For VCC derivatives, that continues to turn on assessment of the underlying credits: quantification methodology, permanence, additionality, delivery mechanics, and market structure.
For industrials and end-users, the removal of a more specific framework may introduce ambiguity about what “good enough” looks like for listing standards and ongoing surveillance. It may also affect the pace of product development and the diligence burden for participants who are new to environmental commodities.
A sustainable voluntary carbon offset market requires transparency and comparability so participants can evaluate projects on a level playing field. In the near term, participants should assume that diligence, documentation discipline, and contractual risk allocation remain the primary tools for managing fraud and delivery risk.