CMC News

#CFTC Launches Tokenized Collateral Initiative for Derivatives Markets

Acting Chairman Caroline Pham has announced the commodity watchdog's new program allowing #stablecoins as collateral for futures and swaps trading. The initiative builds on last year's Global Markets Advisory Committee recommendations to expand non-cash collateral usage through distributed ledger technology.

Tokenized collateral could increase efficiency and transparency in financial contracts while helping markets adapt to emerging technologies. Ripple's Jack McDonald argues this approach reduces default risk by providing more flexible security arrangements for derivatives traders.

The program expands the CFTC's "crypto sprint" implementation of Digital Asset Markets report recommendations. Congress recently passed the #GENIUSAct regulating stablecoins, with the #Treasury and other agencies still developing implementation frameworks for the new legislation.

Industry stakeholders have until Oct. 20 to submit written suggestions on tokenized collateral usage in #derivatives markets. Pham has previously advocated for establishing a digital asset regulatory sandbox to foster responsible innovation within American financial markets.

Circle, Coinbase,   Crypto.com, and Ripple representatives provided statements supporting the initiative. These companies previously participated in the CFTC's February announcement of a non-cash collateral pilot program alongside infrastructure provider Moonpay.

The move reflects the CFTC's commitment to modernizing capital markets through clear crypto guidance. Pham emphasized that tokenized markets represent the future of financial innovation, with the agency maintaining its position at responsible innovation's cutting edge.

Traditional derivatives markets rely on cash or approved securities as collateral for trading positions.