The Commodity Futures Trading Commission (CFTC) has endorsed the use of blockchain technology to manage collateral assets in U.S. derivatives markets, according to a November 21 report from the CFTC's Global Markets Advisory Committee.
Blockchain technologies — including distributed ledgers and Token-based assets — can address long-standing challenges for traditional derivative exchanges and expand the types of assets available for collateral, the report stated.
"Globally, there have been successful and reliable commercial use cases for asset tokenization," CFTC Commissioner Caroline D. Pham said in a statement, adding:
"Now, we can finally start to make progress on regulatory clarity for digital assets in the U.S."
Among other benefits, blockchain networks "can facilitate real-time, 24/7/365 transfers of [collateral] assets without the need for costly or complex intermediary chains," the report said.
They "can also enable peer-to-peer transfers, meaning asset owners can transfer or post collateral commitments without having to go through a broker," the report continued.
The Depository Trust and Clearing Corporation (DTCC) has been testing solutions using blockchain to settle transactions. Source: DTCC
Traders are typically required to provide collateral, or "margin," to secure their trades until settlement.
The CFTC regulates commodity derivative markets, such as futures and options exchanges, and plays a key role in overseeing U.S. cryptocurrency markets.
President-elect Donald Trump, who has vowed to make the U.S. the "cryptocurrency capital of the world," is said to be considering appointing a crypto-friendly commissioner to lead the CFTC when he takes office on January 20, 2025.
Under President Joe Biden, the Securities and Exchange Commission (SEC) and CFTC have taken a strong legal stance on cryptocurrencies, bringing hundreds of enforcement actions against industry firms.
Republican CFTC Commissioner Summer Mersinger, who has called for a more lenient approach to cryptocurrencies, is among those being considered to lead the agency.
Commissioner Pham has also expressed pro-crypto views, including criticizing the CFTC in September for suing Uniswap, a decentralized exchange (DEX), for operating an unregistered derivative exchange.
Source: Gary Gensler
On November 21, SEC Chair Gary Gensler, known for his tough stance on cryptocurrency regulation, announced plans to leave the SEC on January 20, 2025.
Trump is also said to be considering creating a new White House position entirely focused on cryptocurrency policy.
Even before the post-election changes, there were signs that regulators and exchanges were starting to accept cryptocurrencies as collateral for trades.
In September, the Depository Trust and Clearing Corporation (DTCC) — the U.S. securities settlement hub — completed a pilot program exploring the use of U.S. Treasury Bills tokenized as collateral for trades.
