U.S. derivatives regulators have clarified two practical questions for firms using tokenized assets and blockchain systems: when customer funds may be invested in a tokenized instrument, and when onchain records can meet existing recordkeeping duties. The Commodity Futures Trading Commission staff update, released September 24, adds four questions to an FAQ first issued in March.
The document is staff guidance, not a Commission rule. It says the answers do not create enforceable rights, change existing regulations or provide a new no-action position. Firms still have to satisfy the regulations cited in the FAQ.
Tokenization does not expand the permitted-investment list
The new Question 12 addresses futures commission merchants and derivatives clearing organizations that invest customer funds under CFTC Regulation 1.25. Staff says they may use a tokenized form of an otherwise permitted investment, but only if four conditions are met.
First, the underlying asset must already qualify under Regulation 1.25. Second, the token must give its holder legal and economic rights that are the same as, or functionally equivalent to, those attached to the traditional asset. Third, the investment must meet the rule’s existing requirements, including liquidity, concentration, maturity and instrument-feature limits. Fourth, the tokenized asset must sit with an acceptable depository.
Tokenized government money-market fund investments bring an additional custody step. The FAQ says an FCM or DCO would also be expected to obtain the written acknowledgment required by Regulation 1.26(b) from the entity responsible for custody.
Onchain records can qualify if the controls work
Questions 13 and 14 apply a technology-neutral reading to recordkeeping under Regulations 1.31 and 45.2. Staff says regulated entities may create and maintain records on a blockchain or other distributed ledger, provided they fully meet the applicable rule. For electronic regulatory records under Regulation 1.31, that includes systems and controls designed to protect authenticity and reliability.
The guidance covers both general regulatory records and swap-data records. It does not treat use of a blockchain as compliance by itself. A firm must assess whether its risk-management framework, policies and procedures still let it retain and produce the required information.
No automatic offchain-copy mandate, but records must remain available
Question 15 says staff would not object solely because a covered entity chooses not to keep a separate offchain version. That position comes with an operational warning for public, permissionless networks.
A firm using such a network should have systems that can retain and produce its records during an emergency or disruption, including when the network or its block explorer is unavailable. The practical test is access and production under adverse conditions, not whether a record was written onchain.
The update gives registered firms a route to use tokenized instruments and distributed ledgers without creating a separate regulatory category for the technology. Its boundaries are equally clear: tokenization cannot turn an ineligible investment into an eligible one, and a blockchain cannot replace the controls needed to keep records authentic, reliable and available for inspection.
Adapted from CFTC Updates Crypto Asset FAQs on Tokenized Customer Funds and Blockchain Recordkeeping.