CFTC Greenlights Tokenized Customer Funds and Blockchain Recordkeeping

The Commodity Futures Trading Commission (CFTC) has updated its crypto FAQs to allow CFTC-regulated firms to hold customer funds in tokenized form and keep records on a blockchain. The update, issued jointly by the agency's Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk, confirms that staff will not object if a records entity uses blockchain or distributed ledger technology to create and maintain on-chain records.

The guidance covers any CFTC regulations involving recordkeeping and maintenance of regulatory data. To comply with the new rules, customer funds may only go into tokenized forms of otherwise-permissible investments. The tokenized asset must grant the holder legal and economic rights no weaker than those traditional holders receive.

Firms on private networks may not need to maintain off-chain versions of their records, but those using public permissionless blockchains should establish systems and controls that let them retain and produce records under any circumstances, including during an emergency or other disruption to the network. CFTC Chairman Mike Selig said in a statement: 'I'm pleased to see staff update these frequently asked questions consistent with the agency's ongoing efforts to provide regulatory clarity for the crypto industry.'