CFTC Divisions Issue Tokenized Collateral Guidance

Client Alert

On December 8, 2025, the Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk (collectively, “Divisions”) of the Commodity Futures Trading Commission (“CFTC”) issued guidance on the use of tokenized assets as collateral in the trading of futures and swaps.¹ The Guidance follows a September 2025 request for comment² on the use of tokenized collateral in derivatives markets, including on the recommendations made in a November 2024 report of the CFTC’s Global Markets Advisory Committee (“GMAC”).³

Consistent with the GMAC’s recommendations, the Guidance acknowledges that CFTC regulations do not require any particular technology or operational infrastructure to transfer or hold eligible collateral, stating instead that “assets retain their margin eligibility so long as they satisfy applicable regulatory requirements”. The Guidance largely reiterates existing regulations without adding tokenization-specific standards. Nonetheless, the Guidance is significant because it reflects the Divisions’ concurrence with the GMAC’s conclusion that no changes to CFTC regulations are needed, and it identifies areas where
risk-focused analysis is expected.

This bulletin highlights certain key points in the Guidance, focusing on issues raised by the unique attributes of tokenization and considerations relevant to swap dealers subject to CFTC uncleared margin regulations.⁴

Scope and Tokenization Methods

For purposes of the Guidance, a tokenized asset is “a digital representation of a real-world asset, such as a US treasury or agency security, corporate bond, share in a money market fund, or equity security, that has been recorded on a blockchain as a digital token.” The Divisions recommend focusing tokenized collateral efforts on assets currently eligible to serve as regulatory margin.

The Divisions note that the token-holder rights and protections may vary by tokenization method, and state that “any tokenized asset or tokenization structure must be analyzed on an individual basis to ensure it meets all requisite regulatory requirements and registrant policies and procedures.”

Although the Guidance does not analyze particular tokenization methods, it notes the possibility of “functionally equivalent”, rather than identical, legal and economic rights, and of differences regarding settlement timing, credit, market or liquidity risks. Specifically:

• In the context of non-cash assets eligible under uncleared margin regulations, market participants are directed to consider whether a tokenized form of an asset provides a holder with legal and economic rights that are the same or “functionally equivalent” to the rights of the asset in traditional form.
• With regard to valuation haircuts, registered entities and registrants should analyze whether a tokenized form of an asset can be subject to an equivalent haircut as the asset in traditional form, “subject to adjustment for any settlement-time differences or other differences in credit, market, or liquidity risks”.

Tokenization-Specific Considerations

The Divisions “encourage” market participants proposing to use blockchain/DLT to transfer and/or custody tokenized assets as eligible collateral to consider how these proposals fit within their existing risk management frameworks and to address specifically how they meet standards, under existing CFTC regulations cited in the Guidance, regarding (i) legal enforceability, (ii) segregation, custody, and control arrangements; (iii) haircuts and valuation; and (iv) operational risk.

Although the Guidance largely recapitulates existing regulatory requirements as they apply to non-cash margin generally, there is some discussion of considerations specific to the tokenization context:

• Legal Enforceability: Registrants are “required to demonstrate”5 that non-cash assets collected as regulatory margin meet legal enforceability requirements. The Divisions “encourage engagement with staff as market participants and industry groups continue to consider and develop best practices for analyzing tokenized collateral in accordance with existing frameworks.”
• Operational risk: Beyond existing risk management program elements, the Divisions highlight operational readiness, including technical capabilities or expertise that may be required to support DLT-enabled tokenized assets, including identifying measures to address potential cybersecurity, access/authorization, or network-wide threats. The Guidance also cites National Futures Association Interpretive Notice 9070 on information systems security programs.
• Interoperability: The Divisions acknowledge that interoperability may be an important factor to achieve tokenization’s benefits related to liquidity, collateral management, and other operational risks, noting that the “extent to which common standards develop to allow seamless movement of collateral may impact the analysis of some of the factors” cited in the Guidance.

Swap Dealer Regulations Cited

For swap dealers subject to the CFTC’s uncleared margin regulations, the Guidance points to existing requirements:

• Eligible forms of regulatory margin and standardized haircut schedule:⁶ As mentioned above, the Guidance suggests that registrants analyze whether adjustments to haircuts may be appropriate due to differences in settlement timing or credit, market, or liquidity risks. However, the Guidance does not address the compatibility of such adjustments with the fixed haircuts under CFTC Regulation 23.156, leaving it unclear whether features that would result in a larger risk-based haircut would render the tokenized asset ineligible, or whether the larger haircut could be applied while maintaining eligibility.
• Custodial Arrangements:⁷ Requirements regarding custodial arrangements for initial margin, including that the custodial agreement be legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions including in the event of bankruptcy, insolvency, or a similar proceeding.⁸
• Swap Dealer Risk Management Program:⁹ Policies and procedures required in the swap dealer’s risk management program, with specific citation to components addressing market risk, credit, risk, operational risk and liquidity risk, including assessing procedures to liquidate all non-cash collateral in a timely manner and without significant effect on price, and application of appropriate collateral haircuts that accurately reflect market and credit risk. The risk management program must be reviewed and tested at least annually and upon any material change in business that is reasonably likely to alter the swap dealer’s risk profile.

The Guidance, like the GMAC report, does not expressly address the treatment of tokenized assets under the swap dealer net capital regulations.¹⁰

Conclusion

The Guidance represents a significant step toward the integration of blockchain technology into traditional derivatives markets. By confirming that existing regulatory frameworks can accommodate tokenized assets, the Guidance provides a pathway for market participants to leverage the operational efficiencies of tokenization – including faster settlement times, fractional ownership capabilities, and 24/7 trading – while maintaining the robust customer protections and risk management standards that underpin regulated derivatives markets.

1. CFTC Letter No. 25-39 (Dec. 8, 2025). The Guidance does not provide any no-action position and may not be relied upon to create any rights, substantive or procedural, enforceable by law by any party in any matter. Guidance at 6.
2. CFTC, Acting Chairman Pham Launches Tokenized Collateral and Stablecoins Initiative (Sept. 23, 2025), available at: https://www.cftc.gov/PressRoom/PressReleases/9130-25.
3. Recommendations to Expand Use of Non-Cash Collateral Through the Use of Distributed Ledger Technology, Report to the Commodity Futures Trading Commission’s Global Markets Advisory Committee by the Digital Assets Markets Subcommittee (Nov. 21, 2024), available at: https://www.cftc.gov/media/11581/GMAC_DAM_UseofDLTasDerivativesCollateral_112124/download. The GMAC report recommended that (i) a CFTC registrant proposing to accept eligible non-cash collateral in tokenized form should be able to satisfy relevant requirements by applying its existing policies, procedures, and practices in the areas of legal enforceability, segregation and custody arrangements, credit and custodial risk, and operational risk, and that (ii) no new rules or guidance should be necessary to permit such use.
4. Prudentially regulated swap dealers are subject to the uncleared swap margin and capital regulations of their prudential regulators, so the Guidance does not apply to their obligations under those regulations. However, as it relates to the swap dealer risk management program, the Guidance may be pertinent to such swap dealers’ use of tokenized assets in their “swaps activities” (as defined in 17 CFR § 23.600(a)(7)).
5. Apart from this use of “demonstrate” (rather than, e.g., “establish”), there is nothing in the Guidance to indicate that the Divisions intended to create additional requirements for a documented legal review, such as set out in clause (4) of the definition of “eligible master netting agreement”, 17 C.F.R. § 23.151. It is interesting, however, that of the areas of inquiry set out in the Guidance, engagement with staff is mentioned only under “Legal Enforceability”.
6. 17 C.F.R. § 156.
7. 17 C.F.R. § 157(c).
8. Although not mentioned in the Guidance, analysis of enforceability is also a component of the definition of “eligible master netting agreement”, which requires the right to liquidate or set-off collateral promptly upon an event of default, and a legal review to establish that an agreement meets this requirement, among others, and is enforceable. 17 C.F.R. § 151.
9. 17 C.F.R. §§ 600, 600(c) and 600(e)(1).
10. 17 C.F.R. § 23.100 – 106.

Relevant Documents