CFTC opens door to Crypto use as collateral in derivatives markets

The US Commodity Futures Trading Commission has introduced updated guidance for tokenized collateral and opened a pilot program that permits cryptocurrencies to be used as margin in derivatives markets. The move marks a shift toward allowing digital assets in regulated trading environments.

The program was announced by acting chair Caroline Pham. It allows futures commission merchants to accept Bitcoin, Ether and the stablecoin USDC as collateral for customer margin.

Collateral functions as a safeguard to cover potential losses in derivatives trading. The new framework is designed to test how digital assets perform in this role.

Pham said the pilot sets clear protections for customer assets and increases agency oversight and reporting. Circle chief executive Heath Tarbert said the initiative will reduce settlement frictions and support risk management.

Participating firms must file weekly reports detailing customer holdings and any issues tied to crypto collateral. The reporting rules aim to give regulators early visibility into emerging risks.

Alongside the pilot, several CFTC divisions released updated guidance for tokenized assets used in futures and swaps. The document covers tokenized versions of real-world assets, including money market funds backed by US Treasurys.

The guidance outlines requirements for eligible tokenized assets, legal enforceability, and control and segregation arrangements. Pham said the updates give exchanges and brokers a clearer path to add more digital assets as collateral.

The Market Participants Division also issued a no-action position concerning certain requirements for payment stablecoins. It applies to their use as customer margin collateral and to the holding of proprietary stablecoins in segregated accounts.

A previous staff advisory, known as 20-34, was withdrawn. The agency said the document was outdated and no longer applicable, partly because of changes introduced by the GENIUS Act.

Crypto industry figures welcomed the CFTC move. StarkWare general counsel Katherine Kirkpatrick Bos called tokenized collateral significant for derivatives markets and highlighted expected gains in transparency and automation.

Coinbase chief legal officer Paul Grewal said the withdrawn advisory had restricted innovation. Plume Network general counsel Salman Banaei described the pilot as a major step toward broader adoption of on-chain settlement for derivatives and swaps.