The use of digital assets as trading collateral could be approved by the United States Commodity Futures Trading Commission (CFTC) by the end of the year.
According to a report from Bloomberg, a subcommittee of the Commodity Futures Trading Commission’s Global Markets Advisory Committee recently voted affirmatively to recommend a proposal allowing digital ledger technology-based collateral (DLT) in commodities and derivatives trading.
In effect, were the proposal to be accepted by the CFTC, traders could settle transactions using digital assets as collateral with the same speed and ease as similar digital ledger and blockchain based transactions.
Brokers would be able to accept blockchain-based tokenized assets, such as BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) token, via market-embedded systems.
Tokens as collateral
The use of blockchain-based assets as collateral in trading is already fairly common throughout the participating marketplace. However, those participants are limited to large firms such as BlackRock and JP Morgan. The CFTC’s general approval could serve as a catalyst for mainstream adoption.
However, it’s unclear at this time what exactly the Global Markets Advisory Committee has recommended or what’s even in the aforementioned proposal. According to Bloomberg, the main committee still has to approve the subcommittee’s recommendation before the proposal can be formally submitted to the CFTC for approval.
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There’s no guarantee that the CFTC will approve the proposal or that it will pass without potential restrictions concerning which institutes and blockchains can participate.
As Cointelegraph recently reported, spot Bitcoin exchange-traded funds (ETFs) demonstrated banner performance throughout the month of September.
BlackRock’s Bitcoin ETF in particular outperformed its peers. It saw the highest daily inflow of any fund during the month on Sept. 25, during a five-day inflow streak across all spot Bitcoin ETFs in the United States.
US spot Bitcoin ETFs witnessed strong inflows in September, with BlackRock’s fund leading the way. Source: CryptoQuant
This demonstrates the growing popularity and prospective value of digital assets in the traditional finance markets. It could also serve as a bullish indicator for digital asset adoption overall and play some role in the CFTC’s decision-making process.
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