CFTC Clarifies Tokenized Investments and Blockchain Recordkeeping

The Commodity Futures Trading Commission (CFTC) has updated its Frequently Asked Questions (FAQs) on tokenized customer funds and blockchain recordkeeping. The revisions aim to clarify how registrants may invest customer funds in tokenized forms of permitted investments under Regulation 1.25, a rule governing futures commission merchants and derivatives clearing organizations.

The updates also explain when blockchain or distributed ledger technologies can satisfy a registrant's recordkeeping obligations. This move follows the Senate's rejection of the CLARITY Act on September 15 and the CFTC's submission of a proposed crypto market structure rule to the White House's Office of Management and Budget for review.

The FAQs are nonbinding guidance, but they provide clarity for market participants. For instance, the revisions reduce uncertainty about whether holding tokenized government securities or other permitted investments on behalf of customers complies with the rules. The CFTC has also broadened no-action relief for passive crypto software providers.