Background

On March 20, the CFTC’s Market Participants Division (MPD) and Division of Clearing and Risk (together, the Divisions) published FAQs clarifying registrant and registered entity activities relating to crypto assets under the Commodity Exchange Act (CEA). The FAQs build on two staff letters (Letters) issued in December 2025 as part of then-Acting Chairman Caroline Pham’s Digital Assets Pilot Program: Staff Letter 25-39, which addresses the use of tokenized real-world assets (e.g., tokenized U.S. Treasuries and money market fund shares) as collateral; and Staff Letter 26-05 (updating and replacing Staff Letter 25-40), which provides a no-action framework for FCMs to accept non-security digital assets — including BTC, ETH, and payment stablecoins — as customer margin collateral.

Procedural Requirements for FCMs Seeking To Rely on Staff Letter 26-05

To rely on the Staff Letter 26-05 no-action position, an FCM must first file electronic notice with MPD specifying its start date for accepting crypto assets. During the initial three-month phase, the FCM:

  1. is limited to accepting only bitcoin, ether, and payment stablecoins as margin collateral (Asset Limitation);
  2. may deposit only proprietary payment stablecoins as residual interest in futures, foreign futures, and cleared swaps customer accounts;
  3. must file weekly reports detailing digital asset holdings by asset and account; and
  4. must promptly report any significant operational or cybersecurity incidents (Incident Reporting).

After the three-month period expires, the Asset Limitation and Incident Reporting requirements of Staff Letter 26-05 terminate. Thereafter, the FCM may accept other crypto assets as margin collateral, provided that the FCM continues to meet conditions (2) and (3) of the letter. Margin value and applicable haircuts for undermargined, debit, and deficit calculations continue to follow the process outlined in Staff Letter 26-05.

Guidance for Futures Commission Merchants (FCMs)

The FAQs confirm that an FCM operating under Staff Letter 26-05 may apply the post-haircut value of a customer’s non-security crypto assets to secure that customer’s debit or deficit account balance in futures, foreign futures, and cleared swaps accounts — not only to assess whether the account is undermargined. The recent Securities and Exchange Commission (SEC) interpretation on certain crypto assets that are and are not securities, which the CFTC stated it would follow in interpreting the CEA, will assist FCMs in determining the scope of non-security crypto assets available for these purposes.[1]

The FAQs also draw an important distinction between payment stablecoins and other crypto assets for purposes of residual interest deposits. FCMs may deposit proprietary payment stablecoins into segregated customer accounts as residual interest (minimum 2 percent capital charge), but may not deposit proprietary bitcoin, ether, or other crypto assets as residual interest. Although payment stablecoins receive favorable treatment for purposes of residual interest deposits, FCMs may not invest customer funds in payment stablecoins.

The Divisions also specify minimum capital charges that mirror the SEC’s Division of Trading and Markets FAQs on crypto asset activities (updated Feb. 19), which established that the SEC staff would not object to broker-dealers applying a 20 percent commodity haircut under Rule 15c3-1 for proprietary positions in bitcoin and ether and a 2 percent haircut for proprietary positions in payment stablecoins.

Guidance for Registered Swap Dealers

Crypto assets — including payment stablecoins — remain ineligible as initial or variation margin for uncleared swaps under Commission Regulation 23.156. However, consistent with Staff Letter 25-39, a swap dealer may post or collect a tokenized form of an otherwise eligible collateral asset, provided the token grants its holder legal and economic rights that are the same or functionally equivalent to those of the non-tokenized asset.

Guidance for Derivatives Clearing Organizations (DCOs)

DCOs may accept crypto assets, including payment stablecoins, as initial margin for cleared transactions, provided such assets have minimal credit, market, and liquidity risks. Pursuant to Commission Regulation 39.13(g)(12), DCOs must apply haircuts to initial margin to reflect those risks, considering stressed market conditions, and evaluate haircuts’ appropriateness monthly.

Practical Takeaways: Why This Matters

Following publication of the Letters, the Divisions received questions seeking clarification on certain aspects thereof. The FAQs provide that clarity.

  • FCMs can make new uses of certain of their crypto assets. The FAQs resolve open compliance questions — post-haircut deficit treatment, capital charges, proprietary stablecoin deposits — that may have given FCMs pause. FCMs wishing to rely on Staff Letter 26-05 should review its conditions, update their policies and procedures accordingly, and file notice with MPD promptly. The sooner an FCM files, the sooner it completes the mandatory initial phase and can use a wider range of eligible crypto assets as collateral.
  • Payment stablecoins and other crypto assets are not interchangeable for segregated account purposes. Only payment stablecoins may be deposited as FCM residual interest (2 percent capital charge); bitcoin, ether, and other crypto assets may not.
  • Tokenized collateral available to swap dealers as margin may be limited. The token must confer the same or functionally equivalent legal and economic rights as the underlying eligible collateral asset. As more eligible collateral is tokenized, however, the universe of tokenized collateral eligible for use as initial or variation margin will increase.
  • Capital charges and the payment stablecoin definition are now harmonized across the SEC and CFTC. The 20 percent charge for proprietary BTC and ETH positions and 2 percent for payment stablecoins apply under both the CFTC’s framework for FCMs and the SEC’s Rule 15c3-1 framework for broker-dealers, and both agencies use an identical two-phase definition of “payment stablecoin” anchored to the GENIUS Act. Dually registered firms and firms with broker-dealer and FCM affiliates should update capital models and stablecoin eligibility criteria to reflect the harmonized standard.
  • DCOs should develop crypto-specific haircut frameworks now. DCOs accepting crypto assets as initial margin must maintain haircut schedules evaluated at least monthly.

Lowenstein Sandler LLP has significant experience advising FCMs, swap dealers, DCOs, and other financial institutions on CFTC regulatory matters, including the application of the CEA to digital assets and derivatives market infrastructure. Please contact one of the listed authors of this Client Alert or your regular Lowenstein contact if you have any questions regarding the FAQs or their implications for your business.

*This Client Alert is for informational purposes only and does not constitute legal advice. The views expressed are those of the authors and do not necessarily represent the views of Lowenstein Sandler LLP or its clients.

1 See Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, 91 Fed. Reg. 13714 (Mar. 23, 2026); see also SEC Issues Interpretive Framework for Crypto Asset Classification, Lowenstein Sandler: Client Alerts (Mar. 20, 2026), https://www.lowenstein.com/news-insights/publications/client-alerts/sec-issues-interpretive-framework-for-crypto-asset-classification-fctm.