CFTC coordinates the approval of DLT-based collateral in the raw material and derivative trade

• The subcommittee of the CFTC recommends using DLT-based collateral in trade.
• Approval could expand access to digital assets for smaller market participants.
• strong ETF inflows signal an growing institutional interest in digital assets.

In a significant development for the market for digital assets, the US Commodity Futures Trading Commission (CFTC) reports a proposal that would enable the use of security based on digital LEDGER technology (DLT) in raw material and derivate trade.

according to Bloomberg Markets Advisory Committee of the CFTC recently voted to recommend this proposal, which, if it is assumed, could rationalize transactions and promote a broader introduction of digital assets in traditional finance.

a step towards mainstream acceptance

If the proposal from the main committee is finally approved, this could lead to a paradigm shift in the administration of trade security.

The introduction of DLT-based collateral would enable dealers to handle transactions with digital assets at the same speed and efficiency that the digital main book and blockchain technology offers.

This change would enable brokers to accept tokenized assets such as the USD institutional digital liquidity find (Buidl) token from Blackrock via systems embedded in the market.

While the use of blockchain-based assets as security at large financial institutions such as Blackrock and JP Morgan is already gaining in importance, the possible approval of the CFTC would drive a broader acceptance in the entire industry.

At the moment, only large companies were able to use these innovative financial instruments, but this step could open the door to smaller market participants.

uncertainty ahead

Despite the positive dynamics around the proposal, several steps have to be taken before it can be officially submitted to the CFTC permit. The main committee must first check and support the recommendation of the subcommittee, and there is no guarantee that the CFTC will approve the proposal in its current form.

Regulatory concerns about the institutions and blockchains approved for participation can arise, which could lead to potential restrictions that could restrict the scope of the initiative.

In addition, the broader context of digital assets cannot be ignored in traditional finance. The latest trends, such as strong tributaries in stock market-traded Spot-Bitcoin funds (ETFs), indicate growing acceptance and a growing interest in digital assets in institutional investors.

For example, the Bitcoin ETF from Blackrock recently exceeded its competitors and recorded the highest daily inflow of all funds on September 25, which marked a five-day series of tributaries in all Spot-Bitcoin ETFs in the United States.

This increase in interest could influence the decision -making process of the CFTC because it takes into account the effects of the approval of digital assets as security.

While this unfolds, the interest groups will be observed closely on how the regulatory landscape is developing and possibly the way for a more integrated future for digital assets in raw material and derivative trade.