CFTC recommends expansion of non-cash collateral through DLT

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

CFTC said this recommendation provides a legal and regulatory framework for how market participants can apply their existing policies, procedures, practices, and processes to support use of DLT for non-cash collateral in a manner consistent with margin requirements.

Caroline D. Pham, CFTC commissioner said: “All over the world, there have been successful and proven commercial use cases for tokenization of assets, such as digital government bond issuances in Europe and Asia, over $1.5 trillion notional volume in institutional repo and payments transactions on enterprise blockchain platforms, and more efficient collateral and treasury management.

“We can finally begin to make progress on US regulatory clarity for digital assets with today’s GMAC recommendation on tokenised non-cash collateral. This marks a significant first step toward realising these opportunities for our derivatives markets — with exactly the same guardrails and protections in place. Embracing new technology does not mean compromising on market integrity.”