The US Commodity Futures Trading Commission (CFTC) has provided updated guidance on the use of cryptocurrency as collateral in derivatives markets, building on a pilot program launched last year.
CFTC staff issued a notice Friday through its Market Participants Division and Division of Clearing and Risk, addressing common questions from two staff letters issued in December. The letters established a pilot allowing futures commission merchants (FCMs) to accept crypto assets as margin collateral.
“Futures commission merchants participating in the pilot must file a notice with the Market Participants Division, specifying the date they will begin accepting crypto as collateral,” the notice stated.
Pilot parameters and initial restrictions
Under the pilot, FCMs may initially accept Bitcoin, Ether, or stablecoins for three months. They must notify the CFTC promptly of any significant cybersecurity or operational issues and submit weekly reports detailing total crypto holdings across customer accounts.
After the three-month period, other cryptocurrencies may be added, and reporting requirements will end. The CFTC clarified that only proprietary payment stablecoins can be used as residual interest in customer segregated accounts.
Other tokens are not permitted for this purpose.
"The CFTC's decision confirms what the crypto industry has long known: That stablecoins and digital assets can make payments faster, cheaper, and reduce risk,” said Paul Grewal, Coinbase Chief Legal Officer noted at a time
In addition, crypto and stablecoins cannot serve as collateral for uncleared swaps, though swap dealers may use tokenized versions of eligible assets if they meet regulatory standards.
Alignment with SEC standards
The CFTC emphasized that its guidance aligns with the Securities and Exchange Commission (SEC) as the agencies coordinate on a broader regulatory framework for crypto. Futures commission merchants must apply a 20% capital charge for Bitcoin and Ether positions, while stablecoins carry a 2% charge.
Derivatives clearing organizations may accept crypto and stablecoins as initial margin for cleared transactions if they meet CFTC requirements on credit, market, and liquidity risk.
The notice addresses specific operational and risk-management requirements for market participants, clarifying how crypto can be integrated safely as collateral and ensuring that margin calculations, reporting obligations, and asset eligibility are clearly defined.
Roman Zaika
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