BroadChain has learned that on March 22, Cointelegraph reported the U.S. Commodity Futures Trading Commission (CFTC) has issued detailed guidance for its pilot program allowing digital assets to be used as collateral. The regulator has informed Futures Commission Merchants (FCMs) that to participate, they must file a notice with the Division of Market Oversight declaring the effective date for accepting digital assets as margin. The key provisions are as follows:
I. Eligible Assets & Capital Requirements
Only Bitcoin, Ethereum, and stablecoins are permitted as collateral. Bitcoin and Ethereum are subject to a 20% capital charge, while stablecoins carry a 2% charge. For the first three months of the pilot, participating FCMs may only accept these three asset types.
II. Compliance & Reporting
Participating FCMs must promptly report any significant cybersecurity or systems issues. They are also required to submit weekly reports detailing the total value of digital assets held in customer accounts.
III. Program Expansion
After the initial three-month period, the list of eligible collateral may be expanded to include additional digital assets. Certain weekly reporting obligations will also be terminated at that time.
IV. Usage Restrictions
Only dedicated payment stablecoins may be deposited into customer segregated accounts as residual equity. Digital assets cannot be used as collateral for uncleared swaps, though tokenized assets meeting specific criteria may serve as an alternative.
V. Clearing Organization Rules
Derivatives Clearing Organizations (DCOs) that meet the CFTC's credit, market, and liquidity risk standards may accept digital assets and stablecoins as initial margin for cleared transactions.