Key Takeaways
- The regulator is inviting feedback on using tokenized collateral in derivatives markets until October 20
- The initiative will focus on whether tokenized collateral and stablecoins can be integrated into CFTC-regulated markets to increase efficiency, reduce risk, and expand the range of acceptable non-cash collateral.
The U.S. Commodity Futures Trading Commission (CFTC) has launched a new initiative to evaluate the use of tokenized collateral and stablecoins in derivatives markets, Acting Chair Caroline D. Pham announced on September 23.
As per the press release, the initiative will focus on whether tokenized collateral and stablecoins can be integrated into CFTC-regulated markets to increase efficiency, reduce risk, and expand the range of acceptable non-cash collateral. The agency is inviting public comments until October 20 on issues such as valuation methods, custody requirements, settlement risks, and cybersecurity safeguards.
“The public has spoken: tokenized markets are here, and they are the future. For years I have said that collateral management is the ‘killer app’ for stablecoins in markets,”Pham said.
Pham tied the effort to recommendations made earlier this year by the CFTC’s Global Markets Advisory Committee (GMAC), which she sponsors. The GMAC had called for regulators to explore tokenization as part of broader reforms to modernize derivatives markets and adapt to technological innovation.
“Tokenized collateral and stablecoins could be transformative for capital markets if applied responsibly within a regulated framework,” Pham said. She added that pilot programs are being considered to test tokenized assets in real-world clearing and settlement environments before potential rule changes are proposed.
The CFTC emphasized that its review will be guided by international standards, including risk management frameworks established by the Financial Stability Board and the International Organization of Securities Commissions (IOSCO).
Industry players have come out in support of CFTC’s move. Crypto exchange Coinbase’s chief legal officer Paul Grewal took to X on Tuesday to note that “tokenized collateral and stablecoins can unlock US derivatives markets and put us ahead of global competition.”
The latest announcement comes amid the US Securities and Exchange Commission Chair Paul Atkins noting that the regulator is working to create an “innovation exemption” that would ease approval of digital-asset products by the end of 2025
