An advisory committee of the U.S. Commodity Futures Trading Commission (CFTC) has voted to approve the use of crypto assets as margin collateral in trading, according to a November 21 announcement.
The CFTC's Global Markets Advisory Committee (GMAC) received this proposal from the subcommittee on digital asset markets. Next, the proposal will be presented to the full GMAC to determine the next steps for implementation. This is part of the regulator's efforts to integrate crypto assets, such as assets on blockchain or distributed ledger technology, into the traditional derivatives market.
If approved, this proposal could pave the way for tokens from money market funds like BlackRock's BUIDL and Franklin Templeton's FOBXX to be used as margin collateral in derivative trading. This marks a significant step in expanding the crypto asset market.
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No need to change current regulations
According to a statement from the digital asset markets subcommittee, the use of crypto assets as margin collateral does not require changes to existing regulations. On this issue, CFTC Commissioner Caroline D. Pham said:
"Globally, there have been many successful and proven cases of tokenized assets, such as the issuance of digital government bonds in Europe and Asia, over $1.5 trillion in repo transactions and settlements on enterprise blockchain platforms, along with more efficient collateral and cash management."
Ms. Pham emphasized that this announcement represents progress in seeking regulatory clarity for the cryptocurrency industry in the U.S. These proposals, with unanimous approval, provide a legal and regulatory framework for market participants. This includes applying existing policies, processes, and practices to facilitate the use of crypto assets in margin requirements.
