CFTC Launches Pilot Allowing BTC, ETH, USDC as Collateral

New CFTC pilot allows BTC, ETH and USDC as tokenized collateral under strict oversight to boost safer U.S. derivatives use.

Unified guidance outlines rules for tokenized Treasuries and MMFs, stressing custody, enforceability and risk controls.

FCMs get limited relief with reporting duties as outdated Staff Advisory 20-34 is withdrawn under the GENIUS Act.

The Commodity Futures Trading Commission introduced a pilot program in Washington on Monday, allowing Bitcoin, Ethereum and USDC to serve as tokenized collateral in regulated derivatives markets. Acting Chairman Caroline D. Pham announced the initiative after the agency completed new guidance and withdrew older rules that no longer apply under the GENIUS Act.

Tokenized Collateral Controls

The pilot establishes a controlled environment where firms can use tokenized assets under structured oversight. Acting Chairman Pham said the move follows customer losses on non-U.S. exchanges and aims to give domestic traders safer options

She noted that the agency now receives enhanced visibility into how digital collateral behaves during volatile periods. The program links with earlier work from the CFTC’s Crypto Sprint and reflects recommendations from the President’s Working Group on Digital Asset Markets

It also connects to industry consultations, which helped shape expectations for custody, segregation and valuation. The framework limits eligible assets to BTC, ETH, and USDC during the first three months, which creates a narrow testing phase.

Guidance for Tokenized Real-World Assets

Alongside the pilot, three CFTC divisions released unified guidance explaining how tokenized assets fit within existing regulations. The document covers tokenized Treasury securities and money market funds and outlines how firms should address legal enforceability, operational risks and haircut policies.

Officials stated that CFTC rules remain technology neutral and require asset-by-asset reviews. The guidance also clarifies custody expectations for firms adopting tokenized settlement models. These updates aim to ensure consistency as institutions explore new forms of collateral.

FCMs Receive Limited Relief

The Market Participants Division issued a no-action position for Futures Commission Merchants that accept non-securities digital assets as margin. During the initial phase, FCMs must submit weekly reports detailing amounts held across customer accounts and notify staff of any issues.

The CFTC withdrew Staff Advisory 20-34 on the same day, noting that developments since its release and changes under the GENIUS Act rendered it outdated. The rollback aligns legacy guidance with the new pilot and provides clearer rules for registered intermediaries.

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