CFTC Issues Guidance on Tokenized Collateral and Other Crypto Sprint Developments

In furtherance of its Crypto Sprint initiative and its implementation of the recommendations in the White House digital asset report ("White House Report") released over the summer, on December 8, 2025, the CFTC issued new guidance on tokenized collateral and announced the launch of a digital assets pilot program for certain digital assets (including BTC, ETH, and USDC) to be used as collateral in derivatives markets. The CFTC also withdrew an earlier staff advisory on accepting virtual currencies as collateral as outdated and irrelevant. These actions come on the heels of last week's announcement that a CFTC-registered exchange would be permitted to list leveraged spot crypto.

The White House Report called for the CFTC to take immediate action utilizing its rulemaking and exemptive authority to advance digital asset trading in the United States. One of the many recommendations in the White House Report was for the CFTC to provide guidance on the acceptance of digital asset collateral (including payment stablecoins), valuation of assets and haircuts for margin purposes, settlement finality, treatment of digital asset custodians and self-custody, systems safeguards requirements, end-of-day reporting assets that trade 24 hours, seven days a week, and legal considerations in areas such as netting and interests in collateral under CFTC Regulations. Additionally, the White House Report called for guidance on the adoption of tokenized non-cash collateral as regulatory margin to implement the recommendations made by the CFTC's Global Markets Advisory Committee in 2024, as well as the review of the application of eligible depository rules to accounts holding digital assets as collateral under CFTC Regulations.

Tokenized Collateral Guidance

The guidance on tokenized collateral was jointly issued by the CFTC's Markets Participants Division (MPD), Division of Market Oversight (DMO), and Division of Clearing and Risk (DCR), setting forth their views on the use of tokenized assets, including Treasuries, corporate bonds, and money market funds as collateral in the trading of futures and swaps under the CFTC's existing regulatory framework. The guidance notably reminds futures commission merchants (FCMs), derivatives clearing organizations (DCOs), and swap dealers and major swap participants that any tokenized asset or tokenized structure "must be analyzed on an individual basis to ensure it meets all requisite regulatory requirements and registrant policies."

The guidance covers the following areas of regulatory concern:

• Eligible tokenized assets-market participants should focus on tokenized assets where the underlying assets are liquid, with established haircuts, and hold their value in times of financial stress;
• Legal enforceability-registrants are required to show that non-cash assets collected as regulatory margin meet legal enforceability requirements;
• Segregation, custody, and control arrangements-market participants should analyze the legal requirements and the application of tokenized collateral to their existing policies, procedures, and practices for maintaining robust risk management programs addressing segregation, capital, liquidity, and settlement;
• Haircuts and valuation-tokenized assets can use the same risk-based approach for haircuts under Part 39 of the CFTC's Regulations as the underlying asset, and registrants should analyze whether a tokenized form of an asset can be subject to an equivalent haircut as the underlying asset as adjusted for any settlement-time differences or other differences in credit, market, or liquidity risks; and
• Operational risks-implementation of new technologies and holding of tokenized assets as collateral should consider operational readiness and identify measures to address potential cybersecurity, access/authorization, or network-wide threats, among others, as part of their risk management requirements for operational risks.

This guidance is significant as traders, who typically would have to post collateral in cash or Treasuries, can now use BTC, ETH, or USDC as collateral for their derivatives positions. Additionally, tokenized real world assets such as Treasuries and money market funds can now also be used as collateral for derivatives positions, which is notable given the fact that tokenized assets can settle instantly and trade 24 hours a day, seven days a week, as opposed to traditional securities that have a longer T+1 or T+2 settlement processes that is available only during business hours.

Pilot Program for Tokenized Collateral

The Market Participants Division also granted no-action relief to a CFTC-registered futures commission merchant (FCM) and other similarly registered FCMs relating to certain requirements applicable to FCMs that accept non-securities digital assets, including payment stablecoins, as margin collateral or hold proprietary stablecoins in segregated customer accounts. The no-action letter stated that MPD would not recommend an enforcement action against an FCM that accepts payment stablecoins and other non-securities digital assets as customer margin collateral and takes into account the value of the payment stablecoins and digital assets when determining whether a customer account is undermargined and for performing segregation calculations, or deposits its own payment stablecoins into segregated customer accounts as residual interest. FCMs should file a notice of its intent to rely on this no-action position with MPD and the date when the FCM will commence accepting digital assets from customers as margin collateral.

As a condition of the no-action relief granted, MPD also permitted the launch of a pilot program allowing BTC, ETH, and USDC to be used as collateral in derivatives markets. The pilot program will begin with an initial three-month phase where FCMs can only accept these tokens and must provide weekly reports to the CFTC of the total amount of digital assets held in customer accounts, listing each asset type separately for each of the three customer account classes, for close monitoring and notify the CFTC of any significant issues affecting use of margin collateral. The letter noted that the no-action position pertains to securities digital asset collateral that is accepted as margin collateral or for settlement by a registered DCO or a foreign clearing organization or is the underlying commodity of a futures contract listed for trading by a registered designated contract market. Further, the staff expressed their belief that the existing requirements for DCOs and foreign clearing organizations in jurisdictions that have implemented the Recommendations for Central Counterparties are designed to ensure that assets accepted as customer margin collateral are readily marketable in times of market stress with minimal loss in value. Additionally, FCMs may only accept as customer collateral a particular non-securities digital asset only after a determination that such digital asset is readily marketable and highly liquid and remain fully subject to the risk management requirements in CFTC Regulation 1.11.

In conjunction with the announcement of this pilot program, MPD also withdrew its staff advisory on accepting virtual currencies from customers into segregation, which had imposed restrictions on FCMs' ability to accept virtual currencies as customer collateral. MPD noted that the advisory is no longer relevant given subsequent market developments and the enactment of the GENIUS Act.

While this pilot program is initially limited to three months and to BTC, ETH, and USDC, it opens the door for the use of digital assets by CFTC-regulated entities and allows CFTC staff "to assess the proper application of FCM regulatory requirements without unnecessarily limiting the ability of FCMs to accept digital assets as collateral and deposit proprietary payment stablecoins as residual interest in customer accounts." A smaller but nimble agency, the CFTC, may have jumped ahead of the SEC in terms of launching an early digital asset regulatory pilot program that will have tangible results for real customers.

Next Steps and the Bigger Picture

Taken together with last week's announcement giving the green light to leveraged spot crypto trading on a CFTC-registered exchange, the CFTC's Crypto Sprint has proceeded apace in bringing regulatory clarity using its current interpretative and exemptive authority while crypto market structure legislation winds its way through the Senate. In recent remarks, Acting Chairman Pham outlined a timeframe for rulemaking to be completed by August 2026 for technical amendments to the CFTC's regulations for collateral, margin, clearing, settlement, reporting, and recordkeeping to enable the use of blockchain technology and market infrastructure including tokenization. Whether incoming CFTC Chair nominee Michael Selig will proceed under this same timeline is unclear; however, given his pro-crypto and pro-innovation stance, it seems likely that these areas of rulemaking will nevertheless be forthcoming.

The acceptance of tokenized collateral by the regulators is in line with the growth and adoption of tokenization more broadly. Indeed, BlackRock CEO Larry Fink recently made comments noting that tokenization is rapidly emerging as a transformative force in the financial sector and may surpass AI in importance. Comptroller of the Currency Jonathan Gould also made comments earlier this week that the efforts to prevent national trust banks from engaging in crypto custody ignores precedent and is a "recipe for irrelevance," while noting that there is no justification for treating digital assets differently.

This guidance and pilot program from the CFTC is another step toward institutional and regulatory acceptance and adoption of tokenized assets, and therefore is likely further to energize movement to tokenize financial instruments of all kinds.

Elizabeth Davis, who leads the commodities and derivatives business practice at Davis Wright Tremaine, previously served as Chief Trial Attorney at the CFTC. Steve Gannon has advised several of the country's largest financial institutions and focuses on helping the industry adapt to the burgeoning fintech and digital asset spaces. For more insights, contact Liz, Steve, or another member of our financial services team or sign up for our alerts.