CFTC Withdraws Guidance on Listing Voluntary Carbon Credit Derivative Contracts
Client Alert | September 12, 2025
The Commodity Futures Trading Commission has withdrawn its guidance on the listing of voluntary carbon credit derivatives contracts, signaling its evolving priorities.
On September 10, 2025, the Commodity Futures Trading Commission (the Commission) announced that it is withdrawing the final guidance on the listing of voluntary carbon credit (VCC) derivatives contracts, which had been published on October 15, 2024 (the VCC Guidance).
As detailed in a previous Gibson Dunn client alert, the VCC Guidance represented the first U.S. regulatory articulation on the standards applicable to VCC derivatives. It had:
- Framed expectations under designated contract market (DCM) Core Principles 3 and 4, emphasizing that DCMs should address quality standards, delivery points and facilities, and inspection provisions in the design of VCC derivatives contracts to reduce susceptibility to manipulation;
- Encouraged incorporation of industry-recognized standards for “high-integrity” VCCs into contract terms; and
- Highlighted submission requirements under Commodity Exchange Act (CEA) § 5c(c) and Part 40 of the Commission regulations, emphasizing that DCMs should provide complete and thorough documentation and analysis of compliance.
The Commission explained that it was withdrawing the VCC Guidance because “section 5c of the CEA and Commission regulations in parts 38 and 40 already set forth the regulatory framework for listing VCC derivatives contracts” and that a “uniform regulatory framework for listing contracts on a DCM, as already established in the Commission’s regulations, best serves market transparency, expectations, fairness, and integrity.” Additionally, the Commission said that the VCC Guidance:
- Provided “limited value” because it had “not provided DCMs with any new regulatory structure or standards that resulted in the advancement of market transparency or liquidity for VCC derivatives contracts”; and
- Had created a disproportionate focus on one class of products, risking confusion and inconsistency in the application of the CEA and Commission regulations.
The Commission’s withdrawal underscores that VCC derivatives contracts should be evaluated like any other derivatives contracts under the established statutory and regulatory framework. Practically, the withdrawal signals the evolving priorities of the Commission.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Derivatives practice group, or the following authors:
Jeffrey L. Steiner – Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)
Adam Lapidus – New York (+1 212.351.3869, alapidus@gibsondunn.com)
Hayden K. McGovern – Dallas (+ 214.698.3142, hmcgovern@gibsondunn.com)
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