A subcommittee of the Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee has approved guidelines for using tokenized shares of money-market funds as collateral in traditional financial operations.
Integration of Blockchain for Collateral Management
According to a Bloomberg report on October 2, the recommendations aim to integrate blockchain technology into non-cash collateral management. This approach aligns with margin requirements set by U.S. regulators and derivatives clearing organizations.
Potential Impact on Financial Markets
If the full committee approves the recommendations later this year, it could significantly boost the adoption of tokenized collateral. Moreover, it would improve capital efficiency for companies using tokenized assets.
Key Beneficiaries: BlackRock and Franklin Templeton
This movement is set to benefit tokenized funds like BlackRock’s BUIDL and Franklin Templeton’s FOBXX. Currently, BUIDL leads the tokenized U.S. treasuries market with a market size of $518 million, according to rwa.xyz data. Meanwhile, FOBXX holds a $435 million share.
Together, BUIDL and FOBXX account for nearly half of the $2.3 billion tokenized U.S. treasuries market, making them the two largest tokenized money-market funds.
Involvement of Major Institutions
The subcommittee also includes notable institutions like Citadel, Bank of New York Mellon, and Bloomberg LP, indicating strong financial backing.
DeFi Applications Exploring Integration
Decentralized finance (DeFi) applications are actively exploring how to combine traditional finance with blockchain technology.
Aave’s GHO Stability Module Proposal
On August 26, leading DeFi platform Aave proposed a new GHO Stability Module (GSM). This proposal uses BUIDL shares to maintain the stablecoin GHO’s peg to the U.S. dollar. Users provide USD Coin (USDC) as collateral to purchase BUIDL shares, which are then locked in a smart contract.
This system offers two main benefits: it diversifies GHO’s backing with real-world assets and allows BUIDL yields to create value for stablecoin holders.
Ethena Labs Introduces UStb Stablecoin
Stablecoin issuer Ethena Labs also announced the launch of UStb, a new stablecoin backed entirely by BUIDL. By deploying a real-world money-market fund on the blockchain, Ethena hopes to offer a more stable alternative to its rate-backed stablecoin, USDe.
The post Tokenized funds get preliminary approval to be used as collateral in the US appeared first on CryptoSlate.
