Securities Regulation Daily Wrap Up, DERIVATIVES—CFTC opens door to use of some digital assets as collateral in derivatives markets, (Dec 10, 2025)

By John Filar Atwood.

The pilot program, which will expand the use of digital assets in regulated markets, is accompanied by agency guidance and a new no-action position.

The CFTC has given the green light to the increased use of digital assets in regulated markets with a new pilot program for the use of certain assets—bitcoin, ether, and USDC stablecoin—as tokenized collateral in derivatives markets. Crypto market participants have been able to offer tokenized collateral in markets outside the U.S. for a number of years, and many foresee U.S. market benefits to the CFTC’s move such as near-real-time margin settlement and mitigation of settlement-failure and liquidity-squeeze risks across evenings and weekends.

The agency issued accompanying guidance for tokenized collateral and a new no-action letter, which Chair Carolie Pham said are intended to provide regulatory clarity for assets like U.S. Treasuries and mutual funds. The CFTC also withdrew Staff Advisory 20-34 on accepting virtual currencies from customers into segregation, which it judged to be outdated under the GENIUS Act.

Staff guidance. The CFTC staff noted that for purposes of its guidance, a tokenized asset is a digital representation of a real-world asset, such as a U.S. treasury or agency security, corporate bond, share in a money market fund, or equity security, that has been recorded on a blockchain as a digital token. The staff recommended that market participants focus their tokenized collateral efforts on those assets currently eligible to serve as regulatory margin, specifically those where the underlying assets are liquid, with established haircuts, and will hold their value in times of financial stress.

The staff emphasized that none of the CFTC’s regulations require any particular technology or operational infrastructure that a registered entity or registrant must employ to transfer or hold assets as eligible collateral. Assets retain their margin eligibility so long as they satisfy applicable regulatory requirements, such as those addressing legal enforceability, custody and segregation, and risk management, the staff advised.

Accordingly, the staff encouraged market participants proposing to use blockchain/DLT to transfer and/or custody tokenized assets as eligible collateral to specifically address how such processes meet the applicable requirements and to consider how their proposals fit within existing risk management frameworks.

No-action letter. The CFTC no-action letter is addressed to Coinbase Financial Markets and states, among other things, that the Commission will not take enforcement action against a futures commission merchant (FCM) that accepts payment stablecoins and other non-securities digital assets as customer margin collateral and 1) takes into account the value of such payment stablecoins and digital assets when determining whether or to what extent a customer account is undermargined, and performing required segregation calculations, or 2) deposits its own payment stablecoins into segregated customer accounts as residual interest.

Prior to relying on the no-action position, the FCM must file a notice of its intent to rely on the no-action position with the CFTC staff, and the date at which it will commence accepting digital assets from customers as margin collateral. In addition, for a period of three months from the commencement of the FCM’s reliance on the no-action letter, the FCM may accept only digital assets in the form of payment stablecoins, bitcoin, and ether as margin collateral from customers and may deposit only proprietary payment stablecoins as residual interest in futures, foreign futures, and 30.7 customer accounts.

Withdrawal of prior guidance. The staff withdrew Staff Advisory No. 20-34 which provided FCMs with guidance regarding capital and segregation of customer funds requirements associated with the acceptance and holding of customer virtual currency assets. The advisory also provided FCMs with guidance on practices to consider in developing and maintaining risk management programs when holding virtual currency as customer funds.

In light of developments with respect to digital assets and the use of tokenized collateral, including the GENIUS Act and the CFTC’s September launch of an initiative for the use of tokenized collateral including stablecoins in derivatives markets, the staff determined that the prior guidance was outdated and no longer relevant.

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