Acting Chairman Caroline Pham has announced the first U.S. program that allows tokenised collateral in derivatives markets. The Commodity Futures Trading Commission (CFTC) started a pilot program on Monday that lets certain digital assets, like bitcoin (BTC) at $92,554.70, ether (ETH) at $3,321.87, and USD Coin (USDC) or other payment stablecoins, be used as collateral in U.S. derivatives markets.
Acting Chairman Caroline Pham introduced the program as part of a larger effort to make it apparent to market players how to use tokenised collateral, which can include tokenised representations of real-world assets like U.S. Treasuries.
U.S. digital asset pilot program is launched for tokenised collateral, including bitcoin and ether, in derivatives of markets that establish clear guardrails to protect customer assets and provide enhanced CFTC monitoring and reporting. The CFTC began its efforts earlier this year to permit the use of stablecoins as collateral for certain goods.
How the program works
The program is only open to futures commission merchants (FCMs) that meet certain requirements for now. These companies can use BTC, ETH, and stablecoins like USDC as margin collateral for futures and swaps, but they have to follow tight rules about reporting and custody. During the first three months, they have to tell the CFTC about any problems and give weekly updates on their digital asset holdings.
In real life, such an arrangement may imply that a registered company takes bitcoin as collateral for a leveraged swap linked to commodities, while the CFTC keeps an eye on the operational risks and custody arrangements behind the scenes.
The government also sent a no-action letter that allowed FCMs to keep some digital assets in separate customer accounts, but only if they were diligent about managing risks. The CFTC brought back prior guidance from 2020 that had made it hard to use bitcoin as collateral in many circumstances. People today think that advisory is out of date, especially because the GENIUS Act changed the laws for digital assets at the federal level.
Industry response and implications
Leaders in the industry were pleased with the action. This major unlock is exactly what the Administration and Congress wanted the GENIUS Act to do, Coinbase’s Chief Legal Officer, in a statement issued by the CFTC. The CFTC claimed that its laws are still technology-neutral, but that real-world tokenised assets like Treasuries must still meet standards for enforcement, custody, and valuation.