SEC Withdraws Guidance, CFTC Expands Crypto Collateral Use

The CFTC, led by Acting Chair Caroline Pham, has launched a crypto pilot program allowing BTC, ETH, and USDC as collateral, indicative of expanding digital asset oversight.

This initiative reflects shifting regulatory approaches that may shape future market practices and affect crypto assets’ roles in traditional financial systems.

On December 8, 2025, the SEC withdrew obsolete virtual currency guidance, while the CFTC launched a crypto collateral pilot in derivatives markets.

This move highlights ongoing shifts in crypto regulation, significantly impacting trading frameworks. Industry players may face new compliance and operational dynamics.

CFTC Pilot Allows BTC, ETH as Derivatives Collateral

The CFTC’s digital assets pilot (CFTC Press Release 9146-25), effective December 2025, allows BTC, ETH, and USDC as collateral in derivatives markets, aligning with the White House’s recent recommendations (Digital Assets Report EO 14178). The SEC simultaneously removed outdated virtual currency guidance from its framework.

Involvement includes CFTC Acting Chair Caroline D. Pham and SEC Chair Paul Atkins. Pham leads the initiative to implement White House digital asset recommendations through the pilot, with weekly asset reporting requirements.

SEC Retraction Promises a More Permissive Crypto Environment

The SEC’s retraction of previous guidance could foster a more permissive environment for digital assets. The CFTC’s inclusion of crypto as collateral aims to increase market participation and liquidity in the derivatives sector.

Financial institutions might recalibrate strategies due to changes in compliance requirements. Politically, this shift could result in enhanced collaboration (SEC and CFTC Launch Crypto Initiatives) between regulatory bodies aligning digital asset policies.

2022 Pham Proposal for Non-Security Crypto Implementation

This regulatory change echoes the 2022 proposal by Pham to expand exemptive authority for non-security crypto. Historically, the integration of crypto in traditional markets signals growing maturity and acceptance.

Experts suggest these initiatives could lead to better-defined frameworks (House Bill 4431) for separating securities from non-securities. It could stabilize markets and reduce transaction uncertainty, reflecting a trend towards open digital asset engagement.