CFTC Connects Wall Street and Blockchain Using Stablecoin as Collateral

The U.S. Commodity Futures Trading Commission (CFTC) has unveiled a major policy update that permits the use of stablecoins as collateral in derivatives trading, representing a crucial advancement in merging blockchain assets with conventional financial systems. Acting Chair Caroline D. Pham described this as a “measured step” toward updating the CFTC’s regulatory approach to better reflect the changing needs of the market Stablecoins Could Soon Back US Derivatives Trades Under New… [ 1 ]. This move, which is part of the CFTC’s larger “crypto sprint,” seeks to

allow tokenized non-cash assets such as USD Coin (USDC) and (USDT) to be used as margin collateral, potentially transforming the $400 trillion derivatives sector. The public is invited to submit comments on valuation methods, custody requirements, and proposed rule changes until October 20, 2025 U.S. CFTC Moves Toward Getting Stablecoins Involved in… [ 3 ].

This proposal draws on guidance from the February 2025 Crypto CEO Forum and the President’s Working Group on Digital Assets, both of which identified stablecoins as a means to boost liquidity and cut transaction costs Stablecoins Could Soon Back US Derivatives Trades Under New… [ 1 ]. According to a 2023 MIT report, analysts believe that using tokenized collateral could reduce operational costs by as much as 30%. The CFTC’s Global Markets Advisory Committee (GMAC) and Digital Asset Markets Subcommittee (DAMS) have previously supported the use of non-cash collateral through distributed ledger technology, highlighting the agency’s commitment to innovation CFTC Launches Initiative to Enable Stablecoins as Collateral in… [ 2 ].

Clearer regulations have helped accelerate stablecoin usage, especially during the Trump administration. The recently passed GENIUS Act, which sets up rules for issuing and supervising stablecoins, has laid the legal groundwork for this policy How will the GENIUS Act work in the US and impact the… [ 9 ]. The law requires that stablecoin reserves are fully supported by low-risk assets like U.S. Treasuries and that issuers comply with anti-money laundering (AML) standards. This approach is in line with international measures, such as the EU’s Markets in Crypto-Assets (MiCA) regulation, which also enforces strict reserve and transparency rules.

The CFTC’s decision has received widespread support from industry leaders. Heath Tarbert, president of Circle, pointed out that stablecoins like

have the potential to lower costs and improve liquidity in global markets CFTC To Explore Stablecoins for Derivatives Collateral [ 4 ]. Paul Grewal, Coinbase’s chief legal officer, emphasized that this could give U.S. derivatives markets a competitive edge internationally CFTC To Explore Stablecoins for Derivatives Collateral [ 4 ]. Ripple’s Jack McDonald stressed the importance of establishing clear rules for valuation and settlement to build institutional confidence CFTC To Explore Stablecoins for Derivatives Collateral [ 4 ]. These positive responses highlight the increasing trust in stablecoins as a link between decentralized finance (DeFi) and established financial markets.

The CFTC’s plan also highlights growing cooperation among federal agencies. The CFTC and the Securities and Exchange Commission (SEC) have recently released a joint statement supporting unified digital asset regulations CFTC Launches Initiative to Enable Stablecoins as Collateral in… [ 2 ]. SEC Chair Paul Atkins is also leading Project Crypto, an initiative to update regulations and bring blockchain solutions into mainstream finance CFTC Explores Stablecoins Collateral Initiative in US Derivatives… [ 5 ]. This joint effort marks a shift from previous caution to a more organized integration of digital assets into the U.S. financial landscape.

Although the CFTC’s proposal is being carefully examined for potential risks like liquidity concentration and illegal activities, the agency has emphasized a cautious and balanced strategy. Pilot programs and regulatory sandboxes are under consideration to test tokenized collateral in controlled settings Stablecoins Could Soon Back US Derivatives Trades Under New… [ 1 ]. By focusing on “responsible innovation,” the CFTC aims to reduce systemic risks while improving efficiency. Once the public comment period ends, the finalized rules are expected to influence how stablecoins are used in derivatives trading and could have far-reaching effects on the global financial system.