CFTC launches tokenized initiative allowing derivatives traders to post stablecoins as collateral

The Commodity Futures Trading Commission is launching an initiative for the use of tokenized collateral — perhaps most notably including stablecoins — in derivatives markets, Acting Chairman Caroline D. Pham announced on Tuesday.

According to a CFTC statement, the commodity watchdog’s Global Markets Advisory Committee (GMAC), sponsored by Pham, released a recommendation last year to expand "the use of non-cash collateral through distributed ledger technology."

Using tokenized collateral in financial contracts like futures or swaps could potentially increase "efficiency and transparency" while adapting to emerging financial technologies, Jack McDonald, SVP of Stablecoins at Ripple, argued. Collateral is used to secure a trader’s derivatives contract obligations, reducing their risk of default.

The move is part of the CFTC’s wider effort to modernize capital markets and put forward clear guidance for crypto firms. In particular, it builds on the agency’s so-called "crypto sprint" to implement the recommendations in the President’s Working Group on Digital Asset Markets report.

Over the summer, Congress passed the first crypto-specific bill to regulate stablecoins under the GENIUS Act. Regulatory agencies, including the Treasury Department, are still working out how to best implement that law.

Likewise, the CFTC is inviting industry stakeholders to submit suggestions "on the use of tokenized collateral" in derivatives markets. Commenters must provide written input by Oct. 20. Pham has also previously floated the idea of piloting a digital asset regulatory sandbox in the U.S.

"The public has spoken: tokenized markets are here, and they are the future," Pham said. "The CFTC continues to move full speed ahead at the cutting edge of responsible innovation, and I appreciate the support of our industry partners."

Of note, the CFTC’s press release contains statements from Circle, Coinbase, Crypto.com, and Ripple representatives. In February, the CFTC unveiled plans for a non-cash collateral pilot involving stablecoins with participation from those companies and Moonpay.