CFTC Subcommittee Backs Digital Shares as Collateral

A subcommittee of the Commodity Futures Trading Commission (CFTC) has approved guidelines for using tokenized shares of money-market funds as collateral in traditional finance.

As reported by Bloomberg on October 2, these guidelines aim to integrate blockchain technology with non-cash collateral management in accordance with U.S. regulatory standards.

If endorsed by the full committee later this year, the recommendations could boost the adoption of tokenized collateral, enhancing capital efficiency for companies.

This initiative supports BlackRock’s BUIDL fund and Franklin Templeton’s FOBXX, which together dominate the tokenized U.S. treasuries market, holding nearly half of the $2.3 billion sector.

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In decentralized finance (DeFi), Aave has proposed a Stability Module that would utilize BUIDL shares to maintain its stablecoin, GHO, pegged to the U.S. dollar.

Users can provide USD Coin (USDC) as collateral to acquire BUIDL shares, diversifying GHO’s backing while generating yields for stablecoin holders. Ethena Labs is also launching UStb, a stablecoin fully backed by BUIDL, to provide a stable funding alternative to its existing stablecoin, USDe.

Alexander Zdravkov