The U.S. Commodity Futures Trading Commission has provided additional detail on how crypto can be used as collateral under a pilot program launched last year.
In a notice from the Market Participants Division and Division of Clearing and Risk, the CFTC answered frequently asked questions arising from two December staff letters that created the pilot allowing crypto assets to serve as margin in derivatives markets. Futures commission merchants (FCMs) that want to participate must file a notice with the Market Participants Division stating the date they will begin accepting crypto from customers as margin collateral.
The December guidance clarified which tokenized assets may be accepted as collateral, how to value them, and how to calculate margin requirements. The new FAQ emphasizes alignment with the SEC as the two agencies coordinate on a regulatory framework for crypto. Specifically, capital charges should be consistent with the SEC: a 20% capital charge for Bitcoin (BTC) and Ether (ETH) positions, and a 2% charge for stablecoins.
For the pilot’s first three months, FCMs may accept only Bitcoin, Ether, or stablecoins as customer margin. During that period they must promptly report any significant cybersecurity or system incidents and submit weekly reports showing the total crypto held across customer account types. After three months, other cryptocurrencies may be accepted and the weekly reporting requirement will end.
The notice also states that only proprietary payment stablecoins may be deposited as residual interest in customer segregated accounts; other cryptocurrencies are not permitted for that purpose. Crypto and stablecoins cannot be used as collateral for uncleared swaps. However, swap dealers may use tokenized versions of an eligible asset if the tokenized form meets regulatory requirements and confers the same rights as the traditional asset.
Derivatives clearing organizations may accept crypto and stablecoins as initial margin for cleared transactions provided those assets meet CFTC requirements concerning minimal credit, market, and liquidity risk.
FCMs participating in the pilot must follow these filing, reporting, and risk-management expectations as the agencies continue to refine oversight and operational standards for crypto collateral in derivatives markets.
