Caroline Pham, Acting Chair of the U.S. Commodity Futures Trading Commission (CFTC), has taken a historic step toward expanding the use of digital assets in derivatives markets. Pham announced the new Digital Asset Collateral Pilot Program, which allows digital assets like BTC, ETH, and USDC to be used as collateral.
New regulatory guidance for tokenized collateral was published under the program, and Staff Advisory 20-34, which contained outdated regulations related to digital assets, was repealed.
According to the CFTC’s statement, this move is a continuation of Chairman Pham’s tokenized collateral initiative launched in September and is considered a key part of President Trump’s strategy to integrate digital assets into the U.S. financial system.
In his press release, Pham stated that the CFTC aims to provide a safe alternative to offshore exchanges, which have recently experienced losses in the crypto market, and used the following statements:
“This year, the CFTC is leading America’s Golden Age of Innovation and Crypto. US citizens deserve to trade in safe US markets. That’s why I announced last week that spot crypto trading will be available on CFTC-registered exchanges.”
Pham stated that the new pilot program will reinforce the global leadership of the US financial markets by introducing clear and strong control mechanisms for the use of Bitcoin, Ether and USDC as collateral.
Coinbase Chief Legal Officer Paul Grewal called the decision a “long-awaited validation,” saying, “This decision confirms that stablecoins and digital assets can be faster, cheaper, and more secure for payments.”
Related News BREAKING: Critical US Agency CFTC Takes Significant Step for Bitcoin and Ethereum
Jack McDonald, Senior Vice President of Ripple’s Stablecoin Division, stated that regulatory clarity will “improve capital efficiency and solidify US financial innovation leadership.”
Crypto.com CEO Kris Marszalek said the decision was “one of the moments that solidified the promise of making the US the capital of crypto,” adding that the CFTC’s official recognition of tokenized collateral ushered in the era of 24/7 trading in the US.
The CFTC’s new guidance covers the use of tokenized assets as collateral and provides clarification on:
- Which assets are suitable as tokenized collateral?
- Legal validity conditions
- Storage, control and separation arrangements
- Valuation methods and collateral discounts (haircut)
- Operational risks
The guide also covers real-world assets such as tokenized U.S. Treasury bonds and money market funds.
The CFTC’s Market Participants Division (MPD) also announced a “no-action” position on certain obligations for brokerage firms known as Futures Commission Merchants (FCMs). Accordingly,:
- FCMs will only be able to accept collateral in BTC, ETH, and USDC for the first three months.
- During this period, they will be required to submit weekly digital asset collateral reporting.
- The amount of digital assets held in customer accounts and any issues encountered will be promptly reported to the CFTC.
The MPD has completely repealed Staff Advisory 20-34, issued in 2020, which limited brokerages from accepting crypto as client collateral.
*This is not investment advice.
*This is not investment advice.
