CFTC Staff Lets FCMs Take Crypto as Margin, Allows Blockchain Recordkeeping
Commentary by Gage Raju-Salicki
CFTC staff said in updated FAQs that futures commission merchants ("FCMs") and derivatives clearing organizations ("DCOs") may invest customer funds in tokenized forms of permitted investments, and that registrants may keep required records on blockchain networks without offchain copies. Those FAQs also restate earlier staff positions allowing FCMs and DCOs to accept non-security crypto assets, including payment stablecoins, as margin.
In the FAQs, the CFTC's Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk built on Staff Letter 26-05, which lets FCMs treat customer crypto as margin, after haircuts, and deposit proprietary payment stablecoins as residual interest. Staff would not object to capital charges of at least 2 percent of market value for firms' own payment stablecoins and 20 percent for bitcoin and ether, matching SEC haircuts for broker-dealers. DCOs may accept crypto as initial margin for cleared trades if the collateral meets credit, market, and liquidity risk standards.
The new FAQs let FCMs and DCOs invest customer funds in tokenized versions of investments permitted under 17 CFR 1.25, such as tokenized government money market fund shares. The tokens must carry rights the same as or functionally equivalent to the underlying asset's and be held with an acceptable depository. The investments must also meet all of Rule 1.25's terms, including its liquidity, concentration, and maturity limits. Registrants may also use blockchain to satisfy recordkeeping duties under 17 CFR 1.31 and the swap-data rule, 17 CFR 45.2. Firms using public, permissionless blockchains must be able to produce records even during a network outage.
The update followed September 22, 2026, remarks by CFTC Chair Michael Selig, who said the short-term U.S. interest-rate complex now exceeds $60 trillion in open interest. He said blockchain technology and tokenized assets could enable near-instantaneous settlement. After noting that the GENIUS Act is now law, he said the agency had earlier this year expanded eligible tokenized collateral to include certain payment stablecoins issued by national trust banks. He said crypto and precious metals may currently be suitable for 24/7 trading, while agricultural products, energy, and certain financials may not be. He said the Commission will not take a one-size-fits-all approach.
The FAQs build on earlier staff relief (see prior coverage).
Commentary
The CFTC’s updated FAQs provide some additional color in an update to Q5 regarding a swap dealer exchanging crypto assets as initial or variation margin for uncleared swaps entered into with a swap dealer or a financial end user. Of note is the addition of a third paragraph: “the Divisions would not object, for instance, to the use and acceptance of tokenized money market fund shares as initial or variation margin for uncleared swaps provided the underlying fund satisfies the requirements of Commission Regulation 23.156(a)(1)(ix) [and] the tokenized shares grant the holder legal and economic rights that are the same or functionally equivalent to the rights received by holders of the shares in its traditional form[.]”
In a comment letter we wrote last year on behalf of The Digital Chamber in response to the CFTC's tokenized collateral initiative, the Chamber advocated that the CFTC, "[w]ith respect to initial and variation margin regarding tokenized eligible collateral, [should give careful consideration] to different guidance and standards to be applied to cleared versus uncleared entities." The CFTC appears to have given that consideration here, albeit through a concrete example stemming from its elimination of the asset transfer restriction. Either way, the CFTC's updated guidance on this front is welcome.