The Commodity Futures Trading Commission (CFTC) is gradually building a market structure where U.S. Treasury securities and cryptocurrencies could coexist in the future.
On December 12, the CFTC approved the expansion of cross-margining for U.S. Treasury securities.
How the CFTC's new rule impacts cryptocurrency
With this change, certain customers – not just clearing members – can reduce their margin requirements for U.S. Treasury futures cleared by CME Group. CME Group is one of the largest cryptocurrency derivatives trading platforms in the United States.
The expansion also applies to cash government bonds, which are cleared at the Depository Trust and Clearing Corporation's Fixed Income Clearing Corporation.
"Expanding cross-margining to customers brings capital efficiency and can enhance liquidity as well as the stability of the U.S. government bond markets – it's the world's most important market," said Caroline Pham, acting chair of the CFTC.
Cross-margining allows firms to reduce the amount of collateral by netting correlated positions within the portfolio. Expanding this mechanism from dealers' balance sheets to end customers in government bonds represents a significant structural change.
Market participants view this as a practical way to test risk models. These structures enable support for portfolios containing government bonds, tokenized funds, and crypto-assets within a single clearing infrastructure.
In the CME's crypto derivatives, these decisions could have significant impacts on the markets.
If the cross-margining of government bonds and their futures succeeds on a larger scale, similar structures could over time be applied to more complex portfolios. These portfolios may include tokenized government bonds as well as Bitcoin from spot markets used as collateral for CME's Bitcoin and ETH futures, all under unified margin and risk controls.
At the same time, the timing of this regulation coincides with broader crypto regulation, involving both the CFTC and the Securities and Exchange Commission (SEC).
It also resembles the SEC's similar efforts in reforming market structure and clearing systems, as regulators assess how tokenized securities and digital collateral could fit into existing clearing and custody systems.
In particular, the commission led by Pham has recently highlighted the Digital Asset Collateral Pilot project. With this initiative, Bitcoin, Ethereum, and USDC can be used as margin in CFTC-regulated derivatives markets.
These actions demonstrate a regulatory emphasis on capital efficiency and risk management in asset classes that increasingly blur the line between traditional and digital markets.
