The U.S. Commodity Futures Trading Commission (CFTC) has provided more details on its pilot program that allows cryptocurrencies to be used as collateral in derivatives markets. The guidance clarifies which tokenized assets may be used as collateral and how they should be valued and calculated for trading positions. During the initial three months, futures commission merchants must apply a 20% capital charge for Bitcoin and Ether, while stablecoins incur a 2% charge. In this period, FCMs can only accept Bitcoin, Ether, and stablecoins as collateral and must file weekly reports detailing the total crypto held across customer account types.
After three months, other cryptocurrencies may be accepted as collateral and the reporting requirements will be lifted. The guidance also states that proprietary payment stablecoins are the only assets that can be deposited as residual interest in customer segregated accounts, and crypto assets cannot be used as collateral for uncleared swaps. However, derivatives clearing organizations can accept Bitcoin, Ether, and stablecoins as initial margin for cleared transactions if the assets meet the CFTC’s credit, market, and liquidity risk requirements. The pilot is part of the CFTC’s ongoing efforts to integrate crypto assets into traditional financial markets.
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