CFTC Launches Digital Assets Pilot for Tokenized Collateral in Derivatives

The CFTC launched a digital assets pilot program allowing futures commission merchants ("FCMs") to accept Bitcoin, Ether, and USDC as customer margin collateral in derivatives markets.

The Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk ("the Divisions") issued guidance on tokenized collateral along, with a no-action letter establishing conditions for FCMs accepting non-securities digital assets as margin. (See article below.)

The Divisions said that the pilot program limits eligible digital assets to bitcoin, ether, and USDC for the first three months. FCMs relying on the no-action position must provide weekly reporting of total digital assets held in customer accounts by asset type and account class and must promptly notify CFTC staff of significant issues affecting digital asset collateral use. The Divisions explained that the guidance applies technology-neutral analysis to tokenized real-world assets including U.S. Treasury securities and money market funds. The Divisions said the guidance addresses eligible assets, legal enforceability, segregation and custody arrangements, haircuts and valuation, and operational risks.

The CFTC also withdrew prior guidance which restricted FCMs' ability to accept virtual currencies as customer collateral. The agency determined the advisory was outdated following substantial developments in digital assets and tokenized collateral use, including enactment of the GENIUS Act.