The CFTC has launched a pilot program allowing Bitcoin (BTC), Ethereum (ETH), and USD Coin (USDC) to be used as collateral in U.S. derivatives markets, a significant step in the regulation of digital assets. Acting Chair Caroline Pham announced the program, which aims to provide clear guidelines for using tokenized collateral. The initiative is limited to approved futures commission merchants (FCMs) that meet specific criteria and includes strict custody, reporting, and oversight requirements. Under this pilot, participating FCMs must disclose their digital asset holdings weekly for the first three months and notify the CFTC of any issues. This allows firms to accept Bitcoin or Ethereum as collateral for leveraged swaps tied to commodities. The CFTC has also issued a no-action letter permitting FCMs to hold certain digital assets in segregated customer accounts, provided they manage risks appropriately. Importantly, the CFTC has rescinded outdated guidance from 2020 that had restricted the use of crypto as collateral, aligning with the recent passage of the GENIUS Act, which modernized federal rules on digital assets. Industry leaders have welcomed this development, noting its alignment with the intentions of the GENIUS Act. Coinbase's Chief Legal Officer, Paul Grewal, highlighted the importance of this move in enabling the use of digital assets as collateral. The CFTC maintains that its regulations remain technology-neutral, but it insists that tokenized real-world assets like U.S. Treasuries must comply with existing enforceability, custody, and valuation standards. In parallel, the digital asset space is addressing concerns from traditional banking sectors regarding stablecoin yields. The Digital Chamber has countered a recent position paper from bankers advocating for a ban on stablecoin yield, arguing that some rewards are necessary for stablecoin activity while ensuring they don't undermine traditional bank deposits.