CFTC Rolls Out Digital Asset Collateral Pilot, Issues Tokenized Collateral Guidance, And Withdraws Prior Virtual Currency Advisory

On December 8, the CFTC announced a series of staff actions addressing the use of digital assets and tokenized assets as collateral in regulated derivatives markets. The actions include issuance of staff guidance on tokenized collateral, a staff no-action letter applicable to futures commission merchants, and withdrawal of a prior staff advisory related to virtual currencies held in segregation.

The actions were implemented through letters issued by the Commission's Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk. The letters address tokenized collateral used in futures and swaps, conditions under which certain digital assets may be treated as margin collateral or residual interest, and the withdrawal of a 2020 advisory that had imposed additional conditions on accepting virtual currencies into segregated customer accounts.