- The CFTC has announced the launch of a new pilot program that will focus on the use of tokenized digital assets in the US derivatives market.
- The Commission will also erase all outdated rules that do not concur with recent legislation captured in the GENIUS Act.
The US Commodity Futures Trading Commission’s Acting Chair Caroline D. Pham has announced the launch of a digital asset pilot program that could usher in the full operation of tokenized markets for investors. Alongside the program, the agency will also scrap all outdated market rules that deviate from the most recent digital asset legislation.
CFTC Program To Foster Digital Asset Adoption
The Commission’s dedicated Initiative aligns with the concerted efforts by US regulators to streamline digital asset rules and provide clear guidelines for the markets under their oversight. It also follows the CFTC’s lineup of strategies to implement its share of recommendations from the President’s Working Group on Digital Asset Markets.
“Under my leadership this year, the CFTC has led the way forward into America’s Golden Age of Innovation and Crypto. This imperative has never been more important given recent customer losses on non-U.S. crypto exchanges,” said Pham.
“Americans deserve safe U.S. markets as an alternative to offshore platforms, and that’s why last week I announced that spot crypto can now be traded on CFTC registered exchanges.”
In essence, the program will allow certain digital assets such as Bitcoin, Ether, and USDC to be used as collateral or margin in the derivatives markets. The initiative sets crypto in the center of the US financial architecture, while creating “clear guardrails to protect customer assets and provide enhanced CFTC monitoring and reporting.”
Additionally, the agency looks to provide regulatory clarity regarding tokenized collateral for real-world assets such as US Treasuries and money market funds. It will remove rules that do not agree with the GENIUS Act—the first comprehensive regulatory framework for stablecoins in the US.
Derivatives Firms To Accept BTC, Ether, USDC Under Strict Reporting Conditions
The CFTC’s Market Participants Division (MPD) has greenlighted firms that handle customer accounts and trades in derivatives, otherwise known as Futures Commission Merchants (FCMs), to accept non-securities digital assets, including BTC, Ether, and payment stablecoins like USDC from their clients as margin collateral.
Based on the MPD’s conditions, a Futures Commission Merchant or derivatives firm is permitted to accept only BTC, Ether, and USDC as collateral. Firms will also report the total amount of digital assets held by customers on a weekly basis, separately highlighting the respective amounts of the permitted asset classes.
Furthermore, these firms are mandated to proactively and frequently report to the CFTC “any significant issue affecting the use of digital assets as customer margin collateral” to enable the agency staff to properly evaluate their rulemaking in such a way that it does not negatively impact the ability of these firms to keep using crypto and stablecoins in customer accounts.
The US Securities and Exchange Commission is assessing the possibility of loosing tokenized equities from rules binding traditional equities amid kickbacks by big finance. This increasing adoption of tokenized finance on all fronts of the US financial ecosystem signifies the acceleration of US innovation and scores a resounding win for crypto and digital finance.
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