US Regulatory 'Crypto Sprint' Continues as CFTC Overhauls Guidance on Digital Assets

In what are likely among the final days of Acting Chairman Caroline Pham’s tenure at the Commodity Futures Trading Commission, the Commission has issued significant guidance and no-action relief that opens the door to certain digital assets (including payment stablecoins, bitcoin, ether, and tokenized money market funds) being broadly accepted by futures commission merchants as margin. The Commission also rescinded its guidance on when “actual delivery” of virtual currency is deemed to have occurred in retail commodity transactions, leaving questions as to the regulation of firms that serve retail customers.

The Commodity Futures Trading Commission (CFTC) recently took several actions to advance the use of digital assets in the derivatives markets, including the acceptance of their use as collateral.

In particular, on December 8, 2025, the CFTC’s Market Participants Division (MPD) issued no-action relief to allow future commission merchants (FCMs) to accept non-securities digital assets as collateral (Digital Asset Collateral No-Action Letter) significantly more broadly than before, [1] and withdrew CFTC Staff Advisory 20-34, which had limited FCMs’ ability to accept digital assets for that purpose. [2] The Digital Asset Collateral No-Action Letter also establishes a three-month pilot program whereby FCMs are allowed to accept a specific subset of non-securities digital assets as eligible collateral—i.e., payment stablecoins, bitcoin (BTC) and ether (ETH). [3]

On the same day, MPD, together with the CFTC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) (collectively, the Divisions) jointly issued Staff Guidance on the use of tokenized assets, including tokenized money market funds, as collateral in the trading of futures and cleared swaps (Tokenized Collateral Guidance). [4] Then, on December 11, 2025, the CFTC withdrew its 2020 interpretive guidance on the determination of when “actual delivery” has occurred in the context of leveraged retail commodity transactions in virtual currencies (Virtual Currency Delivery Guidance), a common term for cryptocurrency when the guidance was issued. [5]

These actions are all part of the CFTC’s “Crypto Sprint” initiative, undertaken to implement the recommendations and specific directives to the CFTC set forth in the report from the President’s Working Group on Digital Asset Markets (PWG Report). [6] (Refer to our prior coverage of earlier CFTC activity under the current US administration, including the passage of the GENIUS Act relating to payment stablecoins and joint SEC/CFTC guidance confirming the view that certain regulated exchanges may facilitate spot cryptoasset trading.)

The CFTC staff has asserted that the CFTC regulations do not prescribe any particular technology or operational infrastructure (i.e., they are technology-agnostic, in line with the directives from the PWG Report) and as a result, any digital assets (including tokenized assets) are largely subject to the existing legal frameworks for margin collection, the handling of customer funds, and risk management. Exactly how those frameworks will be applied will need to be fleshed out, as discussed further in our more detailed summaries of each of the recent actions below.

DIGITAL ASSET COLLATERAL NO-ACTION LETTER AND PILOT PROGRAM

Pursuant to the Digital Asset Collateral No-Action Letter, MPD will not recommend enforcement against an FCM for

• assigning margin value to non-securities digital assets for purposes of
• making determinations as to undermargined amounts in customer accounts for purposes of CFTC Rules 1.17(c)(5)(viii) and 1.44, and
• performing fund segregation calculations pursuant to CFTC Rules 1.20(i)(5) and 1.32(b) (relating to futures customers), 22.2(f)(5) (relating to cleared swaps customers) and 30.7(f)(2) (relating to foreign futures and foreign options customers) subject to the application of appropriate haircuts for such digital assets, as set forth in detail in the Digital Asset Collateral No-Action Letter; or
• depositing such FCM’s proprietary payment stablecoins into segregated customer accounts as residual interest, notwithstanding the restrictions in CFTC Rules 1.23(a)(1) (relating to futures customers), 22.2(e)(3)(i) and 22.17 (relating to cleared swaps customers), and 30.7(g)(6) (relating to foreign futures and foreign options customers), subject to the FCM imposing an applicable capital charge against the value of such payment stablecoins.

In order to rely on the no-action relief, an FCM must electronically file with MPD a notice of its intent to so rely. Additionally, the no-action relief applies only to non-securities digital asset collateral that is accepted as margin collateral or for settlement purposes by a registered derivatives clearing organization (DCO) or a foreign clearing organization, as applicable, or is the underlying commodity of a futures contract listed for trading by a registered designated contract market.

The terms of this no-action relief also form the basis for the “Pilot Program” spearheaded by Acting Chairman Pham. Under the Pilot Program, for an initial 3-month period, FCMs will be permitted to take the actions described above, though an FCM will be permitted to accept only payment stablecoins, BTC, and ETH as margin collateral. During such period, each participating FCM will also be required to file with MPD weekly reports of the total amount of digital assets being held in its customer accounts and provide prompt notice to MPD of any significant operation or system issue or disruption (e.g., any cybersecurity incidents) that affect the use of digital assets as collateral.

The no-action relief implies that the list of acceptable non-securities digital assets could be expanded in the future to encompass other digital assets (in addition to payment stablecoins, BTC, and ETH).

WITHDRAWAL OF STAFF ADVISORY 20-34

MPD withdrew Staff Advisory 20-34 with immediate effect, explaining that it was no longer warranted given the CFTC’s recent initiatives and the passage of the GENIUS Act. The advisory was inconsistent with the Digital Asset Collateral No-Action Letter, in that it had prohibited FCMs from accepting virtual currency as collateral other than for margining physically settled derivatives of the same virtual currency.

Additionally, Staff Advisory 20-34 had provided that virtual currency collateral could provide margin value only to the related physically settled virtual currency transactions (i.e., virtual currency could not be used to satisfy margin requirements for unrelated transactions). [7] The no-action relief thus significantly expands the permissible uses for digital assets as collateral in FCM customer accounts.

THE TOKENIZED COLLATERAL GUIDANCE

The Tokenized Collateral Guidance sets forth the Divisions’ views as to the use of tokenized assets as collateral in futures and cleared swap transactions. Significantly, the Divisions recommend that market participants desiring to transact in tokenized assets focus their efforts on the utilization of tokenized forms of real-world assets that are currently eligible to serve as regulatory margin under the CFTC Rules—i.e., assets that are liquid, have established haircuts, and that hold their value in times of financial stress.

Examples provided by the Divisions of such assets include shares in money market funds, US treasuries or agency securities, corporate bonds, and equity securities that have been recorded on a blockchain as a digital token.

Noting that “different tokenization methods may provide different rights to token-holders or different levels of protection,” the Tokenized Collateral Guidance also addresses the legal enforceability of the utilization of tokenized assets as collateral; segregation, custody, and control arrangements; haircuts and valuation; and operational risks relating to the implementation of distributed ledger technology (e.g., cybersecurity, information access and transaction authorization, and network-wide threats).

Broadly, the Divisions encouraged market participants to review the CFTC regulations relating to these areas and assess the application of existing frameworks to tokenized assets, including with respect to market participants’ current policies and procedures, and noted that “any tokenized asset or tokenization structure must be analyzed on an individual basis” for compliance therewith.

For example, the Divisions stated that haircuts for tokenized assets can utilize the same risk-based approach already applied to underlying assets—i.e., registrants should analyze whether a tokenized form of an asset can be subject to an equivalent haircut as the asset in its traditional form, adjusting for appropriate risks, such as settlement-time differences.

WITHDRAWAL OF THE VIRTUAL CURRENCY DELIVERY GUIDANCE

Issued in October 2020, the Virtual Currency Delivery Guidance provided clarification as to when “actual delivery” of a virtual currency asset was deemed to occur [8] for the purpose of determining whether a transaction in such virtual currency with a retail customer was a spot market purchase or subject to regulation as a swap pursuant to Section 2(c)(2)(D) of the Commodity Exchange Act. [9]

Generally, when a spot commodity is offered on a leveraged, margined, or financed basis, it is regulated as a futures contract. There is an exception, however, for transactions in which actual delivery occurs within 28 days. This raises the question of what it means to make “actual delivery,” which may be particularly murky in the case of a digital asset.

In the Virtual Currency Delivery Guidance, the CFTC (after notice and comment) stated that, in general, it would utilize a two-pronged approach to that determination: First, it would examine whether the customer has gained “(i) possession and control of the entire quantity of the commodity and (ii) the ability to use the entire quantity” of the virtual currency “freely in commerce.”

Second, it would expect the seller not to “retain any interest in, legal right, or control over any of” any of the virtual currency after the expiration of the 28-day period. If the customer has gained such possession and control within 28 days, under this framework actual delivery will have occurred. Consistent with a guidance document that does not have the force of law, the CFTC explained that the Virtual Currency Delivery Guidance was to “communicate the agency’s [then-]current views” and “an adaptable approach while it continue[d] to follow developments … and evaluate business activity on a case-by-case basis.”

Withdrawing the document, the CFTC found that “in light of further developments during the past 5 years in the means and methods deployed in the spot market for the purchase and sale of virtual currencies and the derivatives markets connected to such spot market,” the 2020 guidance was “likely outdated” and could thus interfere with the agency’s implementation of the directives in the PWG Report.

Although the CFTC was not specific about what developments prompted it to rescind the Virtual Currency Delivery Guidance, it is possible that the change reflects the advent of more recent and complex custody and staking arrangements in which some level of control remains with an intermediary, potentially creating questions under either prong of the now-rescinded approach. On the other hand, with the guidance withdrawn, market participants now lack clarity as to what the CFTC would consider actual delivery. However, the CFTC’s press release indicates that it will consider whether to issue updated guidance or FAQs on the topic.

LOOKING AHEAD

While the actions by the CFTC over the last week expand the potential for the use of digital assets in the derivatives markets, the guidance also makes clear that significant steps to implementation remain. Each of the publications strongly encourages market participants to engage with the CFTC, one another, and industry groups to establish best practices for operationalization.

The following issues will be important:

• The Digital Asset Collateral No-Action Letter and Tokenized Collateral Guidance focus significantly on the development and application of appropriate collateral haircuts for the assets at issue. The no-action relief indicates that, when DCOs provided different haircuts for the same digital assets, an FCM should apply the higher haircut consistently across all of its transactions. If reasonable haircuts cannot be developed, a digital or tokenized asset will not be eligible to be used as collateral.
• The Tokenized Collateral Guidance states that market participants should 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, and market participants using blockchain or other distributed ledger technologies to transfer and/or custody tokenized assets should specifically address how such processes meet the standards and fit within existing risk management frameworks. Thus, market participants should understand that different assets and different tokenization structures may require the development of unique risk management policies and procedures.
• A development that has been long awaited by the derivatives markets, the Tokenized Collateral Guidance should pave the way for most tokenized money market funds being acceptable forms of collateral for futures and cleared swaps. However, the Divisions note that, pursuant to Part 39 of the CFTC regulations relating to DCOs, DCOs must operate “pursuant to a ‘well-founded, transparent, and enforceable legal framework’ that includes, among other things, netting arrangements, the DCO’s interest in collateral, and settlement finality” (emphasis added). [10] We expect that the industry will need to reach a consensus on digital asset netting arrangements (i.e., the development of netting opinions) and treatment of digital assets under the Uniform Commercial Code before institutional operationalization becomes feasible.
• While the Digital Asset Collateral No-Action Letter introduces the three-month Pilot Program for FCMs to accept payment stablecoins, BTC, and ETH as margin collateral, the details of how this would work in practice are not entirely clear. In addition, FCMs will need to build the technological infrastructure to operationalize this ability, so some barriers remain until margining of digital assets is a practical reality.
• The withdrawal of the Virtual Currency Delivery Guidance leaves now unaddressed how settlement factors into the determination of whether a leveraged digital asset transaction is to be treated as a spot transaction or regulated as a futures contract. Further guidance on this subject will be needed and, in the meantime, the CFTC has encouraged the public to engage with the CFTC if they have feedback regarding the same.

The derivatives industry can expect significant further developments from the CFTC on digital assets. Potentially signaling the agency’s next area of focus, the Divisions indicate in the Tokenized Collateral Guidance that they plan to provide additional guidance to FCMs in calculating and administering segregation obligations when digital assets are held on behalf of customers, including separate account treatment under CFTC Regulation 1.44, [11] and to review the application of eligible depository rules to accounts holding digital assets as collateral under CFTC Regulation 1.49. [12]

Associate Nikita Cotton contributed to this LawFlash.