CFTC Implements Stablecoins for Tokenizing Collateral

A New Era Begins for Stablecoins

The United States Derivatives Trading Commission is launching a new initiative to enable the use of stablecoins as tokenized collateral. This development has significant implications for the financial sector.

Caroline Pham, the commission's interim chairwoman, has been advocating for this potential use of stablecoins for years. The Commission announced an initiative to accept stablecoins to meet collateral needs in the deepening derivatives market.

Stablecoins are subject to new regulations under the Generalization of US Stablecoins for National Innovation Act (GENIUS Act). In the process, Circle gathered input from executives at Coinbase and Ripple.

Caroline Pham is leading the initiative and continues to advance the policy despite delays in the presidential confirmation process for Former Commissioner Brian Quintenz. "I have said for years that collateral management, stablecoins, is the most effective practice for the markets, and I look forward to working closely with stakeholders to ensure the use of tokenized collateral," Pham said.

The Commission said it will accept written proposals in this regard until October 20. A recent report by the Chairman's Working Group asked the CFTC to provide guidance on the adoption of tokenized non-cash collateral.

"These market improvements will spur US economic growth because market participants will be able to use their dollars more wisely and move forward," said Caroline Pham.