CFTC Advisory Subcommittee Advances Tokenized Collateral Recommendations
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The Global Markets Advisory Committee (GMAC) Digital Assets Markets subcommittee of the U.S. Commodity Futures Trading Commission (CFTC) has voted unanimously (27-0) to recommend the adoption of distributed ledger technology (DLT) and tokenized assets as collateral for margin in derivatives trading. This proposal aims to expand the use of non-cash collateral through DLT without requiring regulatory changes. The subcommittee suggests that tokenized assets such as World Bank bonds, government securities, corporate debt, money market funds, and gold could be used for margin, potentially increasing the velocity of collateral in the marketplace.
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The key advantage of tokenized collateral is the ability to transfer non-cash assets almost instantly for margin purposes, reducing counterparty and other risks while saving money by eliminating the need to liquidate assets to meet margin calls. This initiative could potentially allow for the use of public blockchain money market funds, such as BlackRock's BUIDL and Franklin Templeton's FOBXX, as well as permissioned blockchain initiatives. However, the proposal still needs to be considered by the full GMAC committee and then approved by the CFTC before implementation. If adopted, this move could significantly impact the $742 trillion over-the-counter derivatives market by improving capital efficiency and portfolio diversification for investors and fund managers.
Goldman Sachs to Spin Out Digital Assets Platform GS DAP
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Goldman Sachs is planning to spin out its blockchain-based technology platform, GS DAP, from its Digital Assets division into an independent, industry-owned entity. This move, aimed to be completed within the next 12 to 18 months subject to regulatory approvals, is part of Goldman Sachs' strategy to enhance interoperability and efficiency in digital financial markets. GS DAP, developed to support the complex needs of institutional clients in digital capital markets, will utilize permissioned distributed technologies to digitize and manage the asset lifecycle through smart contracts and a shared, immutable platform
- The spin-out is designed to create a distributed ecosystem that allows market participants to interoperate seamlessly and efficiently. Goldman Sachs has already partnered with Tradeweb Markets to integrate its trading and liquidity capabilities across the fixed-income spectrum, aiming to introduce new commercial use cases for GS DAP. This separation will enable GS DAP to become a tailored and sustainable solution for the industry, while Goldman Sachs continues to scale its Digital Assets business and advance its technological capabilities in blockchain and digital assets
Archax Launches Tokenized Money Market Funds from Multiple Managers
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Archax, a UK-regulated digital asset exchange, broker, and custodian, has announced the launch of tokenized money market funds (MMFs) from multiple prominent asset managers, including State Street, Fidelity International, Legal & General Investment Management (LGIM), BlackRock, and abrdn. This move is notable given that MMFs are often difficult to differentiate due to their similar investment strategies and risk profiles. However, Archax's approach is designed to provide clients with a range of options that cater to different underlying investment theses, such as investments in short-term governmental or commercial debt issuances.
- Archax is selling these tokenized MMFs both directly on its platform and through various partnerships. The tokens, representing beneficial ownership of the funds, are available on leading blockchains like Hedera Hashgraph, XRPL, and Arbitrum. Archax collaborates with partners such as Ownera, whose FinP2P digital asset network facilitates global distribution and liquidity of these tokenized funds. Additionally, Archax works with TomorrowNext to enhance the execution and management of tokenized MMFs, and with Assetera to expand the distribution of these funds into the EU/EEA market. This multi-faceted approach allows Archax to reach a broader client base, including professional and institutional investors, and to provide almost instantaneous transfer of MMF shares throughout the day, reducing counterparty risk and enhancing capital efficiency.
Standard Chartered to Launch Spot Trading Desk for Bitcoin and Ether
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Standard Chartered, the British multinational bank, is preparing to launch its own spot crypto trading desk for bitcoin and ether. This move is part of the bank's strategy to expand its involvement in the cryptocurrency market as institutional adoption increases. The trading desk will be operated as part of Standard Chartered's FX unit and will be based in London.
- The bank has been working closely with regulators to support demand from institutional clients to trade bitcoin and ethereum. This aligns with Standard Chartered's broader strategy to support clients across the digital asset ecosystem, including access, custody, tokenization, and interoperability. The bank already holds stakes in two digital asset firms, Zodia Custody and Zodia Markets, which provide services ranging from crypto custody to over-the-counter (OTC) trading. In November, Standard Chartered also launched Libeara, a blockchain unit aimed at assisting institutions with the tokenization of real-world assets, including support for the deployment of a tokenized government bond fund using the Singaporean dollar.