CFTC Joins Regulatory Push For Tokenized Collateral

Key Takeaways

• The CFTC is considering expanding the scope of eligible non-cash collateral in derivatives markets to include tokenized instruments, including stablecoins and tokenized money market funds, and has asked for public input by October 20, 2025.
• The announcement follows Congress's passage of the GENIUS Act, which provides a comprehensive regulatory framework for payment stablecoins.
• The CFTC's move furthers the White House's policy goals on crypto assets and the broader adoption of stablecoins and tokenized products.

On September 23, 2025, the Commodity Futures Trading Commission announced that it is seeking public input on the use of tokenized products, including stablecoins and tokenized money market funds, as collateral in derivatives markets.¹ The announcement is the latest initiative in the CFTC's "Crypto Sprint" to implement the recommendations in the President's Working Group on Digital Asset Markets Report,² which, among other things, had directed the CFTC to "provide guidance on the adoption of tokenized non-cash collateral as regulatory margin." While the announcement does not propose any new rules, it is a clear signal from the CFTC that it is looking to expand the scope and form of eligible collateral to normalize the use of tokenized assets as collateral. Public input is requested by October 20, 2025.

The announcement follows the recent passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the "GENIUS Act") as well as a statement by staff of the Securities and Exchange Commission earlier this year that most stablecoins are not securities³. The GENIUS Act creates a comprehensive regulatory framework for "payment stablecoins" and is expected to accelerate the growth of stablecoins and integration of blockchain technology into the wider financial services industry. The initiative also builds on a recommendation by the CFTC's Global Markets Advisory Committee ("GMAC" or the "Committee") on expanding the use of non-cash tokenized collateral. 

CFTC Invites Comments on Tokenized Collateral in Derivatives Markets

Last year, the CFTC's GMAC released a recommendation to expand the use of non-cash collateral through distributed ledger (or blockchain) technology.⁴ The Committee recommended that CFTC registrants be able to use their existing policies, procedures and practices when looking to accept eligible non-cash collateral in tokenized form. The Committee had noted that blockchain technology could address some of the operational challenges that have impeded the use of non-cash collateral in derivatives markets.

While the Commodity Exchange Act expressly permits the use of non-cash collateral, the CFTC and clearinghouses have typically narrowed the scope of eligible collateral to certain identified instruments. For uncleared swaps, the CFTC has identified: (1) government and agency debt securities; (2) gold; and (3) certain multilateral development bank and international organization debt securities, corporate debt securities, listed equities and shares in money market funds as eligible collateral. By contrast, clearinghouses typically limit eligible collateral to cash and "cash equivalents," a term that typically covers only certain high quality, highly liquid short term investments, such as U.S. Treasury bills, certificates of deposit, and shares of money market funds.

The CFTC's announcement comes on the heels of the bipartisan passage of the GENIUS Act, which creates a comprehensive regulatory framework for "payment stablecoins" ⁵ and, among other things, requires "permitted payment stablecoin issuers" to maintain reserves backing their outstanding payment stablecoins on at least a 1:1 basis. Reserves must be limited to cash and other high quality, short term assets, including: (1) U.S. Treasury bills, notes or bonds issued with a stated maturity of 93 days or less, or that have a remaining maturity of 93 days or less; and (2) registered government money market funds that invest solely in the type of eligible reserve assets enumerated in the GENIUS Act.

The GENIUS Act is expected to accelerate the growth of stablecoins and adoption of blockchain-based payment systems in the United States and across borders. The GENIUS Act is also expected to accelerate the integration of blockchain technology into the wider financial services industry.⁶ Several large institutional money market fund sponsors have already made preliminary filings to launch money market funds designed to serve as reserve assets for payment stablecoin issuers.

The CFTC's announcement also comes at a time when more traditional financial services firms are using, or exploring the use of, blockchain technology to "tokenize" real-world assets, such as registered and unregistered money market funds.

Areas of Potential Comment

Tokenization may facilitate the timely posting of collateral in derivatives markets and expand the potential use cases of assets held in tokenized form. For these reasons, many market participants are likely to welcome the CFTC's announcement.

Commenters responding to this call for public input may therefore seek to engage with the CFTC on the conditions under which tokenized collateral will be acceptable, as well as on the specific types of tokenized assets that may be suitable for use as collateral (e.g., tokenized money market funds). Notably, the CFTC has not yet identified any specific crypto asset (other than stablecoins generally) as being suitable for use as collateral. As the 2022 Uniform Commercial Code amendments,⁷ whose provisions enhance confidence in lien priority in crypto assets, come nearer to becoming law in all U.S. states, lingering choice of law issues and related uncertainties should diminish, providing additional impetus for more widespread usage.

Commenters may submit comments through the CFTC's website until October 20, 2025.

Footnotes

1. CFTC, "Acting Chairman Pham Launches Tokenized Collateral and Stablecoins Initiative" (September 23, 2025).
2. White House, "Strengthening American Leadership in Digital Financial Technology" (July 30, 2025).
3. SEC, "Statement on Stablecoins", Division of Corporation Finance (April 4, 2025).
4. CFTC, "Recommendations to Expand Use of Non-cash Collateral Through Use of Distributed Ledger Technology: Report to the Commodity Futures Trading Commission's Global Markets Advisory Committee by the Digital Assets Markets Subcommittee" (November 21, 2024).
5. A "payment stablecoin" is a type of stablecoin designed to be used as a means of payment or settlement, rather than for investment purposes.
6. For more details on expected impact of the GENIUS Act on asset managers, see our prior Dechert OnPoint, The GENIUS Act for Asset Managers: What to Know (August 22, 2025).
7. For additional background on the 2022 Uniform Commercial Code amendments at the time of their proposal, see our prior Dechert OnPoint, The UCC and Emerging Technologies: Proposed Amendments (August 11, 2022).

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