The US Commodity Futures Trading Commission has released detailed guidance for its pilot program allowing crypto assets as collateral in derivatives markets. The notice clarifies capital requirements, reporting obligations, and eligible assets for futures commission merchants. It aligns the CFTC’s rules with the Securities and Exchange Commission, setting a 20% capital charge for Bitcoin and Ether and 2% for stablecoins.
The US Commodity Futures Trading Commission has provided more details on the use of crypto as collateral. This follows a pilot program the agency launched last year, as stated in its official notice.
The CFTC’s divisions responded to frequently asked questions from two staff letters issued in December. The guidance clarified what tokenized assets can be used as collateral and how to value them.
Futures commission merchants must file a notice with the Market Participants Division before commencing. This notice must include the date they will start accepting crypto assets from customers as margin collateral.
The CFTC made clear its guidance was to align with the Securities and Exchange Commission. The two agencies are working together on a regulatory framework for crypto.
Capital charges would be “consistent with the SEC” according to the notice. A 20% charge applies to positions in Bitcoin and Ether, while stablecoins receive a 2% charge.
For the first three months, participants can only accept Bitcoin, Ether, or stablecoins. They must provide prompt notice of any significant cybersecurity or system issues and file weekly reports.
After the three-month period, other cryptocurrencies can be accepted as collateral. The reporting requirements will then end.
The notice clarified that “only proprietary payment stablecoins may be deposited as residual interest in customer segregated accounts.” Futures commission merchants cannot accept other cryptocurrencies for that specific purpose.
Crypto and stablecoins cannot be used for collateral of uncleared swaps. However, swap dealers can use tokenized versions of an eligible asset if it meets regulatory requirements.
Derivatives clearing organizations can accept crypto and stablecoins as initial margin for cleared transactions. They must meet CFTC requirements regarding minimal credit, market, and liquidity risks.
