Commodity Futures Trading Commission has announced the start of a pilot program for digital assets in the United States. This will enable bitcoin, stablecoin USDC, and ethereum to be used in derivatives markets that are regulated. It marks another significant policy change in the way U.S. regulatory agencies approach tokenized assets.
This includes new guidelines for tokenized assets, a no-action limited framework for Futures Commission Merchants (FCMs), as well as the removal of restrictions from the past that are no longer applicable following the passage of the GENIUS Act.
Acting CFTC Caroline Pham, Chair of the Board said that the program aims to increase the use and availability of digital assets on regulated markets. It also maintains oversight while protecting customers.
“Americans deserve safe U.S. markets as an alternative to offshore platforms,” Pham stated in a statement. “Today, I am launching a U.S. digital assets pilot program for tokenized collateral that establishes clear guardrails to protect customer assets and provides enhanced CFTC monitoring and reporting.”
As a pilot, you can use Bitcoin or other crypto.
According to a CFTC press release, FCMs are temporarily permitted to accept a limited set of digital currencies like Bitcoin for customer margin.
During their first three months, participating firms are required to send weekly reports to CFTC, detailing how much digital currency is held on customer accounts. The total will be divided by account type and asset class.
The companies must notify the regulators about any incident that is material and involves digital collateral.
The reporting requirement, according to the agency’s statement, is designed to allow staff to gain real-time visibility into operational risks and to grant firms access to tokenized collateral.
Last week the CFTC allowed Bitnomial is set to launch their exchange under CFTC supervision next week.
Pham announced that CFTC-registered platforms will list crypto spot products. Retail and institutional investors can access futures, options and perpetuals from a regulated single platform.
In conjunction with the pilot program the CFTC’s Market Participants Division and Division of Market Oversight and Division of Clearing and Risk released formal guidance about how tokenized asset should be assessed within existing regulatory structures.
It is important to note that CFTC regulations are not a monopoly. “technology neutral” Tokenized assets are to be treated individually, under current policies and not as an asset class.
This framework is applicable to all tokenized assets, including U.S. Treasuries or money market funds. The framework outlines legal enforceability standards and other things such as custody and control.
A no-action policy was also announced by the agency for FCMs who accept digital assets other than securities as margins, such as payment stablecoins.
This relief allows companies to include digital assets that qualify as qualifying assets in customer accounts, while clarifying how the capital and segregation regulations apply under this new regime.
The crypto industry is applauded
CFTC formally rescinded Staff Advisory No. The CFTC has formally withdrawn Staff Advisory No. 20-34. restricted How virtual currency can be stored in the customer’s account. Since 2020, the advisory has limited operational uses of digital assets for collateral.
According to the agency, the GENIUS Act and developments on digital markets rendered the previous advisory outdated.
Fintech and crypto firms welcomed the new regulations, saying they provide long-awaited certainty.
Coinbase’s chief legal officer, Paul Grewal, said that this move confirms industry belief in stablecoins. Digital assets and cryptoassets can help reduce financial risk.
Heath Tarbert of Circle also added his voice to the discussion, saying that these changes will help reduce settlement risk in derivatives trading and friction by enabling near-real-time settlement.
Crypto.com CEO Kris Marszalek announced that tokenized collateral would be available in U.S. derivatives markets at scale for the first ever. It would also support 24 hour trading.
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Source: bitcoinmagazine.com
