This post was originally published on The FinTech Times
The Commodity Futures Trading Commission (CFTC), the US agency responsible for regulating derivatives markets, is increasingly exploring the role of digital assets and blockchain technology in modernising financial systems.
As part of these efforts, the CFTC’s global markets advisory committee (GMAC), supported by Commissioner Caroline D. Pham, has advanced a recommendation to broaden the use of non-cash collateral through distributed ledger technology (DLT).
The recommendation aims to improve the efficiency of financial transactions by incorporating blockchain or other distributed ledger technologies to streamline the use of non-cash collateral. The move comes in response to operational challenges that have hindered the broader application of such collateral in the US derivatives markets. By leveraging DLT, the CFTC hopes to reduce risks and enhance market efficiency, while maintaining existing regulatory safeguards.
Commissioner Pham highlighted the significance of the proposal, citing successful global examples of asset tokenisation, such as digital government bond issuances in Europe and Asia, and large volumes of institutional transactions powered by blockchain platforms.
She noted that adopting these technologies could significantly improve the efficiency and competitiveness of US markets, while preserving market integrity and investor protection.
Regulatory clarity
“All over the world, there have been successful and proven commercial use cases for tokenization of assets, such
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