The US Commodity Futures Trading Commission (CFTC) expanded its digital asset collateral framework on February 6. This update explicitly authorizes futures commission merchants (FCMs) to accept stablecoins issued by national trust banks as margin. Bank-Issued Stablecoins Enter US Derivatives Margin The revision, detailed in Staff Letter 25-40, serves as a critical course correction to guidance issued in December. That earlier framework had inadvertently created a two-tiered system by restricting eligib ...

Core Insights - The Commodity Futures Trading Commission (CFTC) is facilitating a market structure where US Treasuries and cryptocurrencies can coexist, with a recent approval for expanded cross-margining for US Treasuries [1][5]. Group 1: CFTC's New Order - The CFTC's new order allows certain customers to offset margin requirements between Treasury futures cleared at CME Group, enhancing capital efficiency [2][3]. - This change is expected to increase liquidity and resiliency in the US Treasuries market, which is considered the most important market globally [3]. Group 2: Market Implications - Market participants view the expanded cross-margining as a practical test of risk models that could support portfolios containing Treasuries, tokenized funds, and crypto assets within a unified clearing ecosystem [4][5]. - If successful, this framework could enable more complex portfolios, including tokenized Treasury bills and Bitcoin-backed positions in CME Bitcoin and ETH futures [5]. Group 3: Regulatory Context - The timing of this order aligns with broader regulatory efforts by both the CFTC and the SEC, focusing on capital efficiency and risk management across traditional and digital markets [5][7]. - The SEC is also working on market structure and clearing reforms, assessing how tokenized securities and digital collateral can fit into existing frameworks [6].