U.S. CFTC Clarifies Pilot Requirements for Crypto Assets as Collateral: BTC/ETH Collateral Requires 20% Capital Adequacy Ratio, Stablecoins at 2%

Odaily News The U.S. Commodity Futures Trading Commission (CFTC) has provided detailed guidance on a pilot program for crypto assets as collateral. The regulator has reiterated that Futures Commission Merchants (FCMs) wishing to participate in the pilot must submit a notice to the Division of Market Participants, stating the start date for accepting crypto assets as margin. Key points include:

1. Capital Requirements: Only Bitcoin, Ethereum, and stablecoins are acceptable as collateral. BTC/ETH are to be calculated at a 20% capital adequacy ratio, while stablecoins are at 2%. FCMs participating in the pilot may only accept Bitcoin, Ethereum, or stablecoins for the first three months.

2. Compliance and Reporting Obligations: Participating FCMs must promptly report significant cybersecurity or system issues and submit weekly reports on the total value of crypto assets in customer accounts.

3. Expansion After Three Months: Other crypto assets may be used as collateral after the initial three-month period, and some reporting requirements will be terminated.

4. Limited Use: Only dedicated payment stablecoins are permitted to be deposited into the residual equity of customer segregated accounts. Crypto assets cannot be used as collateral for uncleared swaps, but eligible tokenized assets may serve as substitutes.

5. Derivatives Clearing Organization Requirements: Clearing organizations that meet the CFTC's credit, market, and liquidity risk requirements may accept crypto assets and stablecoins as initial margin for cleared transactions. (Cointelegraph)