CFTC recommends expansion of non-cash collateral through DLT
25 November 2024 US
Image: JHVEPhoto/stock.adobe.com
The Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMSC), sponsored by Commissioner Caroline Pham, has recommended expanding the use of non-cash collateral through distributed ledger technology (DLT) in the US.
This recommendation provides a legal and regulatory framework for how market participants can apply their existing policies and processes to support the use of DLT for non-cash collateral in a manner consistent with margin requirements.
By improving the operational infrastructure for assets already eligible to serve as regulatory margin, the Digital Asset Markets Subcommittee aims to reduce or eliminate various operational challenges through blockchain, or other DLT, without requiring any changes to collateral eligibility rules.
The recommendation was approved without objection, marking the 14th GMAC recommendation advanced to the CFTC in the last 12 months.
Reflecting on successful use cases of tokenisation around the world, Commissioner Pham says that the US can now finally make progress on regulatory clarity for digital assets.
“This marks a significant first step toward realising these opportunities for our derivatives markets — with exactly the same guardrails and protections in place,” she says. “Embracing new technology does not mean compromising on market integrity.”
The GMAC’s Digital Asset Markets Subcommittee also presented on the progress of its Utility Tokens workstream.
Commissioner Pham says that these key assets will help to unleash rapid innovation and growth in the digital economy, adding: “I applaud the leadership of the GMAC and the Digital Asset Markets Subcommittee and workstreams for promoting the competitiveness of our markets and the United States.”
This recommendation provides a legal and regulatory framework for how market participants can apply their existing policies and processes to support the use of DLT for non-cash collateral in a manner consistent with margin requirements.
By improving the operational infrastructure for assets already eligible to serve as regulatory margin, the Digital Asset Markets Subcommittee aims to reduce or eliminate various operational challenges through blockchain, or other DLT, without requiring any changes to collateral eligibility rules.
The recommendation was approved without objection, marking the 14th GMAC recommendation advanced to the CFTC in the last 12 months.
Reflecting on successful use cases of tokenisation around the world, Commissioner Pham says that the US can now finally make progress on regulatory clarity for digital assets.
“This marks a significant first step toward realising these opportunities for our derivatives markets — with exactly the same guardrails and protections in place,” she says. “Embracing new technology does not mean compromising on market integrity.”
The GMAC’s Digital Asset Markets Subcommittee also presented on the progress of its Utility Tokens workstream.
Commissioner Pham says that these key assets will help to unleash rapid innovation and growth in the digital economy, adding: “I applaud the leadership of the GMAC and the Digital Asset Markets Subcommittee and workstreams for promoting the competitiveness of our markets and the United States.”
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