CFTC advisory committee recommends use of tokenized assets as collateral

The Commodity Futures Trading Commission’s advisory committee voted in favor of allowing tokenized assets to be used as collateral for margin trading.

The CFTC’s Global Markets Advisory Committee forwarded the recommendation on these blockchain or distributed ledger technology assets through its digital asset markets subcommittee, according to a Nov. 21 press release.

The proposals will now be forwarded to the full GMAC Committee and next steps will be determined by the US derivatives markets regulator CFTC.

This development could lead to tokens from money market funds, such as BlackRock’s BUIDL and Franklin Templeton’s FOBXX, being used as collateral in traditional derivatives markets. These funds are part of the expanding tokenized asset market.

The digital asset markets subcommittee stated that no regulatory changes are needed to allow the use of tokenized assets as margin collateral. Commenting on the recommendations, CFTC Commissioner Caroline D. Pham noted:

“Around the world, there are digital government bond issuances in Europe and Asia, over $1.5 trillion in notional volume in corporate repo and payment transactions on corporate blockchain platforms, and successful and proven commercial use cases for tokenizing assets more efficiently. collateral and treasury management.”

Pham added that the announcement supports the progress of the US seeking regulatory clarity for the crypto industry.

The CFTC said the recommendations were unanimously approved and provide a legal and regulatory basis for market participants. This includes aspects such as implementing existing policies, procedures and practices to advance the use of tokenized assets within margin requirements.