CFTC pilot opens path for crypto as collateral in derivative markets
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The pilot program allows futures commission merchants to accept Bitcoin, Ether and USDC for margin collateral, provided strict reporting criteria are followed.
The US Commodity Futures Trading Commission (CFTC) has issued updated guidance for tokenized collateral in derivatives markets, paving the way for a pilot program to test how cryptocurrencies can be used as collateral in derivatives markets.
Collateral in derivatives markets serves as a security deposit, acting as a guarantee to ensure that a trader can cover any potential losses.
The digital asset pilot, announced by CFTC acting chairman Caroline Pham on Monday, will allow futures commission merchants (FCM) — a company that facilitates futures trades for clients — to accept Bitcoin (BTC), Ether (ETH) and Circle’s stablecoin USDC (USDC) for margin collateral.
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