US CFTC Clears Path for Tokenized Asset Investments by Futures Firms
The US Commodity Futures Trading Commission (CFTC) has issued guidance allowing futures commission merchants and derivatives clearing organizations to invest customer funds in tokenized versions of financial products that were already permitted under existing regulations.
The new guidance, effective immediately, clarifies the treatment of tokenized financial products within the scope of the CFTC's existing authority. Tokenization does not create new categories of permissible investments; it merely expands the acceptable form of existing permitted products.
The CFTC has outlined four conditions for investing customer funds in tokenized products:
- The underlying financial product backing the token must already be a permissible investment under CFTC rules.
- Token holders must receive the same or substantially equivalent legal and economic rights as holders of the traditional form of the product.
- Existing regulatory requirements applicable to the traditional product, such as liquidity and investment amount limits, must continue to be observed.
- Tokenized products must be held in custody at financial institutions permitted under CFTC rules.
The guidance also addresses recordkeeping obligations and allows for the use of blockchain technology to maintain certain regulatory books and records. However, it prohibits the investment of customer funds in payment stablecoins.