CFTC Opens Door to Tokenized Assets and Blockchain Records
US futures brokers can now put customer funds into tokenised versions of permitted assets and keep required records on a blockchain, per new CFTC guidance.
America's derivatives regulator has taken a clear step towards tokenisation. Staff at the Commodity Futures Trading Commission (CFTC) have revised their guidance so that futures commission merchants (FCMs), along with the other “records entities” the agency supervises, can use tokenised assets and blockchain-based recordkeeping.
The change came as an update to the staff's frequently asked questions rather than a brand-new rule, but it gives regulated firms a much clearer picture of what the CFTC is prepared to accept.
Two things US futures firms can now do
The first change is about where customer money can go. FCMs may place customer funds in tokenised versions of assets they are already permitted to hold, with tokenised Treasuries the obvious example. There is a condition: the token must give holders legal and economic rights that are “the same or functionally equivalent” to those of the underlying traditional asset. Put simply, a token only qualifies if it works, legally and financially, like the thing it represents.
The second change covers paperwork. CFTC staff said they “would not object” if a firm used blockchain or distributed-ledger technology to create and store the records it is required to keep, so those records can live on-chain.
The safeguards that come with it
None of this removes a firm's duty to make sure assets are held properly. The guidance also treats different kinds of networks differently:
- Firms that use public blockchains must build systems and controls that let them pull up their records even during an emergency or a network outage.
- Firms on private networks may not have to keep separate off-chain copies of those records.
CFTC Chairman Mike Selig welcomed the update. “I'm pleased to see staff update these frequently asked questions consistent with the agency's ongoing efforts to provide regulatory clarity,” he said.
Why this matters for tokenised assets
Tokenised Treasury and money-market products have grown fast. If futures brokers can use them to hold customer funds, a far larger pool of institutional money could move on-chain. Brokers already park client money in safe, liquid instruments, so tokenised versions of those same instruments are a natural fit.
The guidance landed in an unusually busy week for tokenisation. UK banks settled tokenised deposits with one another, and ARK joined hands with Securitize to tokenise a venture fund.
What Indian investors should take from it
Nothing changes directly for Indian investors. SEBI has studied tokenisation but has not yet allowed it for retail investors. Even so, the US approach is a useful benchmark to follow. It shows a regulator accepting tokenised products only where the rights match the traditional asset, and asking firms on public chains to plan for outages. Those are the kinds of conditions worth watching for if India opens up tokenisation in future.
FAQ
What did the CFTC allow?
Under the updated staff guidance, US futures commission merchants can invest customer funds in tokenised versions of assets they are already allowed to hold, and they can keep their required records on a blockchain.
What are tokenized assets?
They are real-world assets, such as Treasuries, stocks or funds, that are represented as tokens on a blockchain.
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