CFTC Subcommittee Approves Proposals to Use Tokenized Shares as Collateral

Large investment firms such as BlackRock and Franklin Templeton may begin using tokenized shares of money market funds as collateral on trades. This development was made possible after a group affiliated with the Commodity Futures Trading Commission (CFTC) approved rules for the use of such assets.

The CFTC subcommittee decided to submit the recommendations to the committee, which is expected to vote on them by the end of the year. According to two sources familiar with the matter, the content of the recommendations was not disclosed, but the fact that the recommendations were forwarded to the committee indicates that the process is progressing.

The CFTC has not yet responded to CoinDesk’s request for comment.

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) is a popular example of tokenizing traditional investments (like bonds and funds) with blockchain technology. The BUIDL fund became the largest tokenized Treasury fund just six weeks after its launch in March, surpassing the $500 million market cap in July.

It was stated that BlackRock and Bloomberg LP, the parent company of Bloomberg News, are also included in the CFTC’s Global Markets Advisory Committee.