The CFTC has updated its FAQs to clarify that customer funds may be invested in tokenized versions of already-permitted assets like U.S. Treasuries and corporate bonds, and regulated firms can use blockchain for recordkeeping. Chairman Michael S. Selig stated the update aligns with the agency’s effort to provide regulatory clarity. However, the CFTC has not approved direct investment of customer funds in cryptocurrencies such as Bitcoin or Ether. The guidance comes as the CLARITY Act failed to advance in the Senate, though industry leaders argue blockchain adoption will continue without a comprehensive market-structure law.
The U.S. Commodity Futures Trading Commission (CFTC) updated its FAQs to address bringing tokenization and blockchain-based infrastructure closer to the existing regulatory framework. The Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk focused on two specific issues.
The first issue is whether customer funds can be invested in tokenized versions of investments already permitted under CFTC rules. The second is whether regulated firms can use blockchain technology to meet recordkeeping obligations.
CFTC Chairman Michael S. Selig stated, “I’m pleased to see staff update these frequently asked questions consistent with the agency’s ongoing efforts to provide regulatory clarity for the crypto industry.”
The CFTC clarified that assets already permitted under its rules can be held in tokenized form. Traditional assets such as U.S. Treasuries, corporate bonds, or money-market fund shares can be represented as blockchain-based tokens, provided the token gives holders the same legal and economic rights as the traditional asset.
Regulation 1.25 sets strict rules on where FCMs and DCOs can invest customer money. The new guidance means eligible investments can be tokenized but must still meet requirements for liquidity, concentration limits, maturity, other investment conditions, and custody.
The CFTC has not approved direct investment of customer funds in cryptocurrencies such as Bitcoin or Ether. Staff Letter 26-05 did not expand the list of permitted customer-fund investments, and its framework concerns certain crypto assets being accepted as margin collateral under specific conditions.
The CFTC also greenlit blockchain and distributed ledger technology for regulatory recordkeeping. Regulated entities can maintain on-chain records, but those records must meet existing requirements for authenticity, reliability, retention, and accessibility.
This change allows blockchain to create transparent, time-stamped, and auditable records while reducing the need to maintain separate on-chain and off-chain records. Firms remain responsible for producing records even during network outages or other disruptions.
The CLARITY Act failed to advance in the Senate on September 15 following months of stalled negotiations between Republicans and Democrats. Despite the failure, Circle CEO Jeremy Allaire and Michael Saylor argued that blockchain adoption and industry development will continue without a comprehensive market-structure law.
