The US Commodity Futures Trading Commission has released updated guidance on tokenized collateral in derivatives markets, laying the groundwork for a pilot program that will test the use of cryptocurrencies as collateral.
In derivatives trading, collateral functions as a security deposit to ensure traders can cover potential losses.
Announced Monday by CFTC acting chairman Caroline Pham, the digital asset pilot will allow futures commission merchants (FCMs)—firms that facilitate futures trading for clients—to accept Bitcoin, Ether and Circle’s USDC stablecoin as margin collateral.
The pilot marks another step toward integrating crypto into regulated financial markets. Circle CEO Heath Tarbert said the initiative will enhance customer protection, streamline settlement, and help reduce risk.
Pham noted that the program “establishes clear guardrails to protect customer assets and provides enhanced CFTC monitoring and reporting.”
Participating FCMs will also face strict oversight, including weekly reports on total customer holdings and disclosures of any issues that could affect the use of crypto as collateral.
Updated CFTC guidance for tokenized assets
The CFTC’s Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk have issued updated guidance on how tokenized assets can be used as collateral in futures and swaps trading.
The guidance addresses tokenized real-world assets—including U.S. Treasury–backed money market funds—and outlines criteria for eligible tokenized collateral, legal enforceability, and required segregation and control arrangements.
In a post on X, Caroline Pham said the new guidance “provides regulatory clarity and opens the door for more digital assets to be added as collateral by exchanges and brokers, in addition to U.S. Treasurys and money market funds.”
The Market Participants Division also issued a “no-action position” covering certain requirements related to the use of payment stablecoins as customer margin collateral, as well as the holding of proprietary payment stablecoins in segregated customer accounts.
Additionally, the CFTC withdrew Staff Advisory 20-34—which had restricted FCMs from accepting crypto as customer collateral—calling it “outdated and no longer relevant,” in part due to changes introduced by the GENIUS Act.
Crypto industry welcomes the move
The updated guidance drew strong support from several crypto industry leaders.
Katherine Kirkpatrick Bos, general counsel at StarkWare, said the adoption of tokenized collateral in derivatives markets is “MASSIVE,” citing benefits such as atomic settlement, greater transparency, automation, and improved capital efficiency. She added that the change may feel sudden, but pointed back to the tokenization summit in February 2024 as an early sign of progress.
Coinbase chief legal officer Paul Grewal also praised the decision, describing Staff Advisory 20-34 as a “concrete ceiling on innovation” that relied on outdated information and exceeded the proper scope of regulation, ultimately undermining the goals of the President’s Working Group.
Salman Banaei, general counsel at the layer-1 blockchain Plume Network, called the CFTC’s action a “major move” and another step toward broader adoption.
“This moves us closer to using on-chain infrastructure to automate settlement for the world’s largest asset class—OTC derivatives and swaps,” he said.
