CFTC initiative to allow stablecoins as collateral in derivatives markets

The US Commodity Futures Trading Commission is looking to allow tokenized assets, including stablecoins, to be used in derivatives markets as collateral in a move supported by crypto executives.

CFTC acting chair Caroline Pham said^[1] on Tuesday that her agency will “work closely with stakeholders” on the scheme and is encouraging feedback on using tokenized collateral in derivatives markets until Oct. 20.

“The public has spoken: tokenized markets are here, and they are the future. For years I have said that collateral management is the ‘killer app’ for stablecoins in markets.”

If implemented, stablecoins like USDC (USDC^[2]) and Tether (USDT^[3]) would be treated similarly to traditional collateral like cash or US Treasurys in regulated derivatives trading. Congress passed laws earlier this year regulating stablecoins, which have seen their adoption grow^[4] among financial institutions.

Stablecoin, crypto heavyweights back move

Crypto executives from stablecoin issuers^[6] Circle Internet Group, Tether, Ripple Labs and crypto exchanges Coinbase and Crypto.com all gave their stamp of approval for the CFTC’s move.

Circle president Heath Tarbert said that the GENIUS Act “creates a world where payment stablecoins issued by licensed American companies can be used as collateral in derivatives and other traditional financial markets.”

“Using trusted stablecoins like USDC as collateral will lower costs, reduce risk, and unlock liquidity across global markets 24/7/365,” Tarbert added.

US President Donald Trump signed the GENIUS Act^[7] into law in July. It’s geared toward establishing clear rules for payment stablecoins, but is still awaiting final regulations before implementation.

Coinbase chief legal officer Paul Grewal also backed the move, and said^[8] in a X post on Tuesday that “tokenized collateral and stablecoins can unlock US derivatives markets and put us ahead of global competition.”

Meanwhile, Jack McDonald, senior vice president of stablecoins at Ripple, said the initiative is a key step toward integrating stablecoins into the “heart of regulated financial markets,” and driving greater efficiency and transparency in derivatives markets.

“Establishing clear rules for valuation, custody, and settlement will give institutions the certainty they need, while guardrails on reserves and governance will build trust and resilience.”

Initiative in the works since early 2025

Pham said the tokenized asset initiative will build on the CFTC’s Crypto CEO Forum and is also part of the previously announced crypto sprint^[10] to apply the President’s Working Group on Digital Asset Markets recommendations.

The crypto CEO forum in February^[11] called for crypto industry CEOs to provide input on an upcoming digital asset pilot program and discussed the use of tokenized non-cash collateral.

Related: CFTC adds crypto leaders to digital asset group, JPMorgan exec tapped for co-chair^[12]

The CFTC’s Global Markets Advisory Committee also released a recommendation last year from its Digital Asset Markets Subcommittee on expanding the use of non-cash collateral through distributed ledger technology^[13].

US crypto regulatory landscape changing

Pham’s announcement comes the same day Securities and Exchange Commission Chair Paul Atkins said his agency is working on an innovation exemption^[14] that would act as a regulatory carve-out, giving crypto companies temporary relief from older securities rules while the SEC develops tailored regulations.

He also announced Project Crypto in July, which hopes to modernize the securities rules and regulations around crypto and move America’s financial markets to move onchain.
Magazine: US risks being ‘front run’ on Bitcoin reserve by other nations — Samson Mow^[15][16]