The Commodity Futures Trading Commission (CFTC) is taking steps towards the integration of tokenized assets in traditional finance. On Thursday, the CFTC’s Global Markets Advisory Committee approved recommendations to use tokenized money-market fund assets, such as those from BlackRock and Franklin Templeton, as collateral in derivatives trading. This move brings tokenized assets closer to mainstream financial use, but these recommendations are not yet enforceable policy.
The recommendations will need to be reviewed by the full CFTC commission, and no timeline has been set for the next steps. While the committee’s recommendations are influential, they do not constitute law, and implementation could still take significant time. The proposal involves using distributed ledger technology (DLT) to manage non-cash collateral while ensuring compliance with regulatory requirements.
The potential market for tokenized assets is growing, with McKinsey estimating that tokenized assets—excluding stablecoins—could reach $2 trillion by 2030. This would represent a substantial portion of the current $3.25 trillion crypto market. Some crypto prime brokers, such as Hidden Road and FalconX, have already started accepting tokenized assets like BlackRock’s BUIDL token as collateral for crypto-derivative trades.
Franklin Templeton has also moved into the tokenization space, allowing institutional investors to transfer fund-related tokens via the Stellar blockchain. The company has enabled conversions from USDC stablecoins to U.S. dollars for fund share purchases, further bridging traditional finance and digital assets.
Wall Street has been experimenting with tokenization in various pilot programs, but these projects have largely remained small-scale due to the absence of regulatory clarity. The CFTC’s endorsement is significant because it could provide the guidance necessary for broader adoption. If adopted as policy, this move could pave the way for tokenized collateral in traditional financial systems.
The subcommittee that drafted these recommendations includes key industry players such as Citadel, BlackRock, and Bloomberg LP. According to Caroline Butler, co-chair of the subcommittee, collateral management is one of the primary drivers for tokenization. Butler described this development as a pivotal moment for the financial sector, emphasizing the growing role of collateral in pushing the tokenization agenda forward.