The Commodity Futures Trading Commission (CFTC) is quietly laying the groundwork for a market structure where U.S. Treasury bonds and cryptocurrencies can coexist.
On December 12, the CFTC approved the expansion of cross-margining for U.S. Treasury bonds.
CFTC's new measures, the impact on cryptocurrencies
Under this amendment, some clients will be able to offset margin requirements between Treasury futures cleared by the CME Group, not just settlement members. The CME Group is one of the largest cryptocurrency derivatives trading platforms in the U.S.
This measure also applies to cash U.S. Treasuries cleared at the Fixed Income Clearing Corporation (FICC) of the Depository Trust & Clearing Corporation (DTCC).
“Expanding cross-margining for customers will enhance capital efficiency, improving the liquidity and resilience of the U.S. Treasury market, the most important market globally.” – Caroline Pham, Acting Chair of the CFTC
The cross-margining system allows for the offsetting of related positions within a portfolio to reduce total collateral requirements. Expanding this system to the final customers of U.S. Treasuries on dealers' balance sheets represents a structurally significant change.
Market participants evaluate this as a practical test of risk models. This framework could ultimately support portfolios that hold U.S. Treasuries, tokenized funds, and cryptocurrency assets within a single clearing ecosystem.
In the case of cryptocurrency derivatives traded on the CME, this order could have a significant impact on the market.
When U.S. Treasuries and Treasury futures can be cross-margined on a large scale, similar structures can support more complex portfolios. Such portfolios may include tokenized Treasuries and spot Bitcoin, which can be used as collateral for CME Bitcoin and ETH futures positions, all operated under an integrated margin and risk management framework.
This command can be seen as part of the regulatory efforts for cryptocurrencies being jointly pursued by the CFTC and the SEC.
This also aligns with the ongoing market structure and clearing reforms that the SEC is pursuing, as regulators evaluate how tokenized securities and digital collateral might be applied within existing settlement and custody frameworks.
In particular, the committee led by Chair Pham recently unveiled a digital asset collateral pilot. This initiative allows Bitcoin, Ethereum, and USDC to be utilized as margin in CFTC-regulated derivatives markets.
These measures demonstrate a regulatory trend focused on capital efficiency and risk management in a market where the boundaries between traditional and digital assets are becoming increasingly blurred.
