Key Highlights
- The Blockchain Association submitted an extensive response to the CFTC’s fintech Request for Information (RFI).
- The group proposed 11 reforms aimed at modernizing derivatives regulations for blockchain-based financial infrastructure.
- Recommendations include recognizing tokenized collateral, stablecoins, on-chain records, and 24/7 settlement.
The Blockchain Association (BA) has urged the U.S. Commodity Futures Trading Commission (CFTC) to overhaul several regulations governing digital assets, arguing that existing rules were designed for traditional financial infrastructure and are increasingly becoming obstacles to blockchain innovation.
In a formal response submitted on July 9 to the CFTC’s Request for Information (RIN 3038-ZA24), the industry trade group outlined 11 recommendations covering tokenized collateral, stablecoins, decentralized finance (DeFi), blockchain infrastructure, self-custody wallets, and 24/7 markets.
The submission comes as the CFTC reviews whether existing regulations unnecessarily limit innovation while maintaining customer protection, market integrity, and financial stability.
Regulate the function, not the technology
One of the central themes throughout the Blockchain Association’s filing is that regulators should focus on what firms do, rather than the technology they use.
The organization argued that blockchain infrastructure should not automatically trigger traditional financial licensing requirements if providers are simply offering software or technical services.
Instead, it said firms performing regulated activities such as custody, brokerage, clearing, or market operation should remain subject to CFTC oversight regardless of whether they operate on blockchain or traditional systems.
According to BA, blockchain-based financial systems can support the Commodity Exchange Act’s objectives without weakening market oversight.
Association seeks expanded stablecoin and tokenized collateral rules
A significant portion of the letter focuses on modernizing collateral rules.
The Blockchain Association praised the CFTC’s recent guidance on tokenized collateral but argued that additional reforms are needed to allow regulated firms to use tokenized real-world assets (RWAs) and payment stablecoins more broadly for margin and settlement.
The group recommended that payment stablecoins be recognized as eligible collateral when they meet objective standards such as:
- Full reserve backing
- Legally enforceable redemption rights
- Transparent reserve reporting
- Operational resilience
- Appropriate custody and transfer controls
BA specifically targeted CFTC Regulation 23.156, noting that payment stablecoins remain outside the enumerated collateral permitted for uncleared swap margin. It asked the Commission to consider rulemaking or coordinated guidance allowing qualifying stablecoins where reserve, redemption, liquidity and operational standards are met.
According to BA, the question should not be whether collateral exists on blockchain but whether it satisfies the same risk standards as traditional financial assets.
Blockchain infrastructure needs rules built for 24/7 markets
The association also argued that many CFTC regulations still assume markets operate only during traditional business hours. Since blockchain networks function continuously, BA said regulated entities should be permitted to demonstrate compliance through real-time margining, automated settlement, and continuous collateral management rather than legacy end-of-day processes.
The letter argues that blockchain-native infrastructure could actually reduce certain operational risks by improving settlement speed and collateral mobility.
However, it also acknowledged new challenges such as smart contract vulnerabilities, oracle failures, validator risks, and private key management that regulators should address directly.
Calls for DeFi and on-chain records to be recognized
The Blockchain Association urged the CFTC to provide clearer regulatory guidance for decentralized finance, arguing that existing rules do not adequately address protocols operating without centralized intermediaries. It said self-custody wallet providers, front-end interfaces, APIs, and software developers should not automatically be treated as regulated intermediaries simply because they provide access to blockchain networks.
The filing also calls for greater recognition of blockchain-native recordkeeping. According to the association, on-chain records should satisfy books-and-records requirements when they are complete, searchable, immutable, and accessible to regulators. It argues that recognizing blockchain data could improve transparency and auditability while reducing duplicative reporting obligations for regulated firms.
Part of broader push for crypto regulatory reform
The Blockchain Association’s latest filing builds on a series of recent policy efforts aimed at reshaping how U.S. regulators approach digital assets.
In May, the association urged the Federal Deposit Insurance Corporation (FDIC) to revise its proposed stablecoin framework, arguing that reserve-backed stablecoins should be assessed using objective risk standards rather than different requirements for bank and non-bank issuers. It also called for clearer rules on reserve segregation, redemption rights, and equal regulatory treatment across the stablecoin sector.
More recently, the Solana Policy Institute submitted its own recommendations to the CFTC, advocating updated rules for blockchain infrastructure, including clearer guidance on self-custody software, tokenized assets, blockchain-native recordkeeping, and continuously operating markets.
The Blockchain Association’s latest recommendations follow a similar theme but expand the discussion across a much broader range of issues, including tokenized collateral, payment stablecoins, decentralized finance, on-chain books and records, and regulatory treatment of blockchain infrastructure providers.
Industry seeks modern rules, not less oversight
The Blockchain Association said its proposals are intended to modernize existing regulations rather than weaken oversight of digital asset markets. It argued that firms performing regulated activities such as custody, brokerage, clearing, or exchange operations should remain subject to CFTC supervision regardless of whether they use blockchain technology.
At the same time, the group said neutral software developers, wallet providers, APIs, and other infrastructure providers should not automatically be treated as regulated financial intermediaries simply because their products interact with blockchain networks.
As Congress continues debating crypto legislation, including the CLARITY Act, the filing outlines a roadmap for adapting existing derivatives rules to tokenized assets, stablecoins, DeFi, and blockchain-based financial infrastructure without fundamentally rewriting the Commodity Exchange Act.
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