Comment Text:
(Please Refer to the Attached File for the Signed Document.)
SettleMint NV
Philipssite 5 bus 1,
3001 Leuven, Belgium
Tel: 1 (689) 246 2723
+44 (756) 873 7906
Email: [email protected]
November 24th, 2025
Mr. Christopher J. Kirkpatrick
Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Re: Request for Input on the Use of Tokenized Collateral, Including Stablecoins, in Derivatives Markets
Dear Mr. Kirkpatrick:
We appreciate the opportunity to submit comments on the CFTC’s Tokenized Collateral and Stablecoins Initiative. SettleMint NV (“SettleMint”) is a global blockchain infrastructure provider offering an enterprise-grade platform for asset tokenization and decentralized applications. We work with financial institutions and corporates worldwide to deploy tokenization solutions from stablecoins and tokenized deposits to bonds, funds, and equities in a secure, compliant environment. In this capacity, we strongly support the CFTC’s initiative to recognize tokenized collateral, including stablecoins, as eligible collateral in derivatives markets. We believe this forward-looking step will improve market efficiency and resilience, and we commend the Commission for aligning its efforts with the Global Markets Advisory Committee’s Digital Asset Markets Subcommittee (DAMS) recommendation and the President’s Working Group report calling for such action. SettleMint’s experience as a blockchain infrastructure provider gives us a unique perspective on how tokenization can enhance collateral management, and we are pleased to offer our comments in support of the Commission’s efforts.
Benefits of Tokenized Collateral in Derivatives Markets
Enhanced Efficiency and Speed:
Tokenized assets enable near-instantaneous, 24/7 transfers of collateral, eliminating the settlement delays and cut-off times inherent in traditional systems. In practice, this means margin calls can be met promptly across time zones and after banking hours, reducing “gap risk” and the need to maintain excess cash buffers. For example, a properly designed stablecoin or tokenized fund share can be moved between counterparties in real time, around-the-clock, greatly accelerating the post-trade collateral process compared to reliance on wire transfers or other legacy methods. This continuous availability of collateral helps market participants avoid liquidity crunches and improves overall market stability in times of volatility.
Transparency and Auditability:
Blockchain-based tokenization provides an immutable ledger of all collateral transactions, improving transparency and recordkeeping for both market participants and regulators. Rather than limiting this to permissioned environments, both permissioned and public blockchain networks can provide these capabilities, every transfer or pledge of collateral is recorded on-chain and viewable (to authorized parties) in real time, creating a complete and tamper-proof audit trail. This level of granular transparency supports timely reconciliation, dispute resolution, and regulatory oversight. SettleMint’s platform, for instance, enables either private, permissioned networks or compliant public chains, depending on regulatory, operational, and interoperability requirements. Such design best practices harness the benefits of distributed ledgers without sacrificing compliance or control, giving both CFTC and market risk managers better tools to monitor collateral flows and concentrations.
Programmability and Automation:
A distinguishing advantage of digital tokenized assets is their programmability. Collateral tokens can be governed by smart contracts that automate and enforce operational and regulatory requirements. For instance, interest and dividend distributions can be automated for tokenized collateral that represents yield-bearing instruments, ensuring there is no “dead time” where posted collateral sits idle. This improves capital efficiency for derivatives market participants – a benefit noted in prior industry feedback – by allowing collateral to earn income even while posted, something not possible with traditional cash margin or most stablecoins. Additionally, smart contracts can embed compliance rules (such as whitelisted addresses, jurisdiction restrictions, or concentration limits) directly into the asset’s logic.
This means that regulatory constraints and risk management rules become machine-enforceable. Collateral transfers can be conditional on satisfying these programmed checks, reducing operational risk and ensuring that only eligible counterparties or accounts can receive the assets. The “programmable” nature of tokenized collateral thus enables new levels of automation, from self-executing margin calls and auto-rebalancing of collateral pools to real-time monitoring of exposure – all of which bolster the resilience and integrity of the derivatives market infrastructure.
Improved Cross-Border Operations: In today’s global markets, cross-jurisdictional transactions often encounter friction due to differences in banking hours, payment systems, and legal frameworks. Tokenized collateral can mitigate these issues. A digital asset used as collateral can be transferred globally without intermediate banks, simplifying cross-border margin movements. This is particularly valuable for institutions active in multiple regions: they can mobilize collateral across borders instantly, rather than having to pre-position large buffers in each jurisdiction. Notably, recent pilots have shown that tokenized money market fund shares and government bonds can be moved on a DLT network to meet FX and OTC derivatives margin requirements nearly instantly, demonstrating the potential for significant efficiency gains in the world’s largest markets. By embracing tokenized collateral, the CFTC will facilitate U.S. firms’ ability to compete in a 24-hour global marketplace where such technology is increasingly adopted, thereby strengthening American leadership in digital financial innovation, consistent with the emphasis of the President’s Working Group report.
In summary, tokenization can deliver faster settlement, greater transparency, and smarter automation in collateral management, to the benefit of both market participants and regulators. These benefits are not merely theoretical – they are being validated by ongoing industry use cases and trials. We have observed that when implemented on robust, permissioned blockchain platforms, tokenized collateral lowers operational costs and operational risks while unlocking liquidity that would otherwise be trapped by operational delays. Many market participants have voiced support for these efficiencies, and we agree that tokenization “may facilitate the timely posting of collateral in derivatives markets” and expand the utility of assets held in tokenized form, a development widely welcomed by the industry.
Operational and Regulatory Advantages of a Programmable Framework
As a blockchain infrastructure provider, SettleMint is particularly attuned to the technical and operational considerations of deploying tokenized assets in a regulated context. We wish to highlight how a well-designed, programmable tokenization framework can simultaneously satisfy operational needs and regulatory safeguards:
• Institutional-Grade Controls: Through smart contract features and network design, tokenized collateral platforms can incorporate institutional risk controls from the ground up. For example, identity verification and role-based permissions can be required for any wallet transacting in collateral tokens. This ensures that only authorized FCMs, DCOs, or other regulated entities participate in the collateral ecosystem – mirroring the access controls of existing financial market infrastructure. The ability to embed KYC/AML checks and eligibility criteria at the protocol level means that even as collateral moves fluidly, it does so within a framework of compliance. In our experience, these measures give regulators confidence that blockchain-based systems can uphold the same standards as traditional systems, if not improve upon them by preventing unauthorized or non-compliant transfers by design.
• Real-Time Monitoring and Reporting: A permissioned DLT collateral system can be configured to provide regulators and supervisors with direct viewing access or automated reporting. Unlike current systems that might involve end-of-day reports, a DLT-based system can furnish real-time data on collateral balances, movements, and locations. The immutable ledger can also facilitate more efficient audits – for instance, a DCO or the CFTC could instantly verify the provenance and sufficiency of posted collateral at any time. This continuous visibility is an operational boon for risk management and a regulatory advantage for oversight. We encourage the CFTC to recognize these transparency gains as a form of “built-in” regulatory compliance that comes with distributed ledger use.
• Settlement Finality and Security: We note that ensuring settlement finality in a DLT context is vital. The technology today allows for near-instant settlement, but it is equally important that transfers of tokenized collateral are irrevocable and legally certain. Best practices in permissioned networks – such as the use of well-vetted consensus mechanisms and legal frameworks that recognize digital ledger entries as authoritative – can achieve a level of finality comparable to traditional systems. In fact, last year’s DAMS report to the GMAC highlighted that **blockchain technology can reduce or eliminate many operational challenges (e.g. settlement timing and custodial fragmentation) that have impeded the use of non-cash collateral, all without requiring changes to the underlying eligibility rules. In other words, by improving how collateral moves and is recorded, DLT can make the management of already-permissible collateral more efficient while upholding the same legal and risk standards as existing processes.
• Interoperability with Legacy Systems: An often overlooked advantage of enterprise DLT solutions is their ability to integrate with legacy infrastructure. SettleMint’s platform, for instance, supports APIs and middleware that connect on-chain events with off-chain systems (trading platforms, custodians, clearing systems, etc.). This means tokenized collateral can be adopted incrementally and safely, without a wholesale replacement of current workflows. Collateral tokens representing, say, U.S. Treasury bills or money market fund shares can be designed to interoperate with existing custody arrangements – for example, by reflecting off-chain asset holdings on-chain via a “digital collateral registry” model. Such hybrid approaches, already utilized in Europe’s collateral markets, show that tokenization can be added as a layer atop current infrastructure to enhance mobility and tracking of assets. We believe the CFTC can encourage this kind of phased, interoperable adoption, which allows innovation to take place under the watch of proven risk management frameworks and best practices in custody and settlement.
The Case for Regulatory Clarity and Standards
SettleMint fully endorses the pursuit of regulatory clarity and the development of standards to enable infrastructure providers like us to support innovation in a safe and effective manner. We respectfully offer the following observations and recommendations:
Implementing the DAMS and PWG Recommendations: We echo the calls from both the CFTC’s advisory committees and the interagency Working Group for prompt guidance on tokenized collateral. In November 2024, the GMAC’s Digital Asset Markets Subcommittee (DAMS) recommended that distributed ledger technology be integrated into collateral management for assets already eligible as margin, emphasizing that existing policies and procedures could be applied to tokenized forms of those assets. This recommendation recognized that there is no legal obstacle in CFTC rules to using a tokenized version of, for example, a U.S. Treasury or a share of a money market fund as margin, since those assets are inherently allowed – it is simply a matter of recordkeeping and transfer mechanism. We agree wholeheartedly with this principle. The act of tokenization should be viewed as a modernized recordkeeping and settlement mechanism, not a change in the underlying asset’s nature.
Furthermore, the President’s Working Group report on Strengthening American Leadership in Digital Financial Technology, released in July 2025, explicitly urged the CFTC to “provide guidance on the adoption of tokenized non-cash collateral as regulatory margin” in order to implement the GMAC’s recommendation. We support this directive and encourage the Commission to move forward expeditiously with clear guidance. Such guidance would remove any ambiguity for market participants and infrastructure firms by affirming that tokenized forms of permissible collateral are acceptable for margin purposes under CFTC regulations, provided the tokenization process meets certain security and recordkeeping standards. In our view, this step is critical to give firms confidence to invest in and adopt these new solutions. It is also aligned with broader U.S. policy, as the CFTC’s initiative furthers the White House’s policy goals of embracing responsible innovation in crypto assets and blockchain finance.
Expanding Permissible Collateral and Finalizing Rule Updates: In addition to guidance on tokenization, we urge the CFTC to consider amendments to any rules that may inadvertently hinder the use of high-quality tokenized assets as collateral. For example, current CFTC margin regulations for uncleared swaps impose a restriction that U.S. government money market funds used as collateral must not engage in repurchase agreements or securities lending. This restriction, which predates digital assets, has the effect of excluding many robust government money market funds (including those that might hold repos for liquidity management) from the pool of eligible collateral, even if they are otherwise low-risk and fully compliant with SEC Rule 2a-7. We join other commenters in supporting the CFTC’s outstanding proposal to eliminate this restriction. Removing such barriers would broaden the availability of tokenized money market fund shares as permissible collateral, thereby increasing market participants’ options. Notably, Acting Chairman Caroline Pham has remarked that finalizing this change is “imperative” to unlock greater efficiency through tokenized money market funds as collateral. We strongly agree and urge the Commission to adopt these amendments as soon as possible, alongside the tokenization guidance, so that the full benefit of the DAMS recommendation can be realized.
Incorporating Stablecoins Under a Robust Framework: The inclusion of regulated stablecoins as eligible collateral is a natural next step given recent developments. Congress’s passage of the “Guiding and Establishing National Innovation for United States Stablecoins Act” (GENIUS Act) in July 2025 has established a comprehensive federal framework for payment stablecoins. Under this framework, only rigorously supervised institutions can issue “permitted payment stablecoins,” and they must be 100% backed by high-quality liquid assets such as cash, short-term U.S. Treasuries, or shares of registered government money market funds. These requirements effectively ensure that qualifying stablecoins are economically equivalent to other cash-equivalent collateral already accepted in many contexts. We believe that well-regulated stablecoins (e.g. tokenized USD held to a 1:1 reserve) can be a safe and effective form of collateral, particularly for meeting variation margin demands rapidly. They offer the advantage of on-chain transfer speed without undermining the prudential soundness of the collateral, thanks to the mandated reserves. We encourage the CFTC to coordinate with fellow regulators (the Federal Reserve, OCC, etc.) as needed to recognize such stablecoins as eligible collateral in a manner consistent with their cash-like nature. Doing so will not only expand the collateral toolkit for clearinghouses and counterparties, but also further solidify the U.S. lead in setting standards for stablecoin utilization in mainstream finance. We note that several large financial institutions are already exploring tokenized money market funds specifically designed to serve as reserves for stablecoin issuers, a sign that traditional finance and digital assets are converging in a way that can enhance market liquidity and stability. The CFTC’s openness to stablecoin collateral will accelerate this healthy integration of innovation with prudent risk management.
Developing Standards for Permissioned DLT and Custody: To support safe adoption, we recommend that regulators and industry work together to develop technical and operational standards for the use of DLT in collateral management. These could include standards for cyber-security, key management, settlement finality mechanisms, interoperability protocols, and sound governance of permissioned networks. For instance, clear guidelines on the role and requirements for digital asset custodians or token trustees (who hold the backing assets or control the minting/burning of tokens) would help ensure that tokenized collateral systems have resilience and trust equivalent to existing systemsdwt.com. Similarly, standardizing how tokenized collateral is valued and haircut (e.g., using transparent on-chain price oracles or off-chain price feeds) will be important for risk management. We applaud that the White House Report specifically calls for guidance on many of these issues – such as valuation, haircuts, settlement finality, and treatment of custodians in the context of digital asset collateral. SettleMint stands ready to contribute our technical knowledge to the development of such best practices. We believe that with the right standards in place, the “plumbing” of tokenized asset markets can be made every bit as robust as traditional market infrastructure, while delivering superior performance. The CFTC’s recognition of the need for these standards, and its participation in their formation (potentially via tech sprints, sandboxes, or coordination with groups like IOSCO and NIST), would greatly enhance the credibility and safety of tokenized collateral arrangements.
Exploring Pilot Programs and Industry Collaboration: Finally, we support the CFTC’s interest in engaging with industry through pilot programs and collaborative efforts. As noted in the Commission’s request, one area of feedback sought is the concept of digital asset market pilot programs for new initiatives. We think pilot or sandbox programs are a prudent approach to innovation – they allow regulators to observe new technology in a controlled environment and gather data before broad implementation. We encourage the CFTC to establish a pilot framework for tokenized collateral (perhaps in partnership with one or more DCOs or industry consortia) to test parameters such as risk, throughput, and legal treatment (e.g., perfection of security interests in tokenized collateral under the Uniform Commercial Code amendments). Such pilots can inform permanent rule changes and help market participants gain practical experience. Likewise, maintaining observer status in industry-led standard-setting or working groups on blockchain collateral (as the CFTC has suggested) will enable knowledge-sharing between the public and private sectors. SettleMint would welcome the opportunity to participate in any such forums, contributing insights from our deployments of permissioned blockchain networks for financial use cases.
Conclusion
In conclusion, SettleMint strongly supports the CFTC’s initiative to broaden the scope of permissible collateral to include tokenized assets and stablecoins. We believe this forward-leaning approach will modernize derivatives markets by improving collateral mobility, transparency, and efficiency, all while maintaining the high regulatory standards that protect market integrity. By clarifying that tokenization is an acceptable and even advantageous means of managing collateral, and by updating any outdated rules that needlessly restrict the use of high-quality tokenized instruments, the Commission can catalyze innovation that makes our markets safer and more competitive. Importantly, this can be achieved without compromising risk management – in fact, as discussed, a well-regulated tokenized collateral framework can enhance risk controls and oversight through improved technology. We appreciate and agree with Acting Chairman Pham’s sentiment that these changes are not only common sense but also unlock greater efficiency for market participants.
Thank you for your consideration of our views. SettleMint is committed to supporting the responsible growth of blockchain applications in finance, and we stand ready to assist the Commission as it develops policy in this area. We would be glad to meet with the CFTC’s leadership or staff to further discuss our recommendations or to provide any technical demonstrations that might be helpful.
Sincerely,
Navita Prayman
Vice President of Digital Assets
SettleMint NV
Tel: 1 (689) 246 2723
+44 (756) 873 7906
Email: [email protected]
cc: The Honorable Caroline D. Pham, Acting Chairman, CFTC
Brigitte Weyls, Senior Counsel, Office of Acting Chairman Pham
Thomas J. Smith, Acting Director, Market Participants Division, CFTC
