CFTC Lets Registered Firms Invest Customer Funds in Tokenized Form

The US Commodity Futures Trading Commission updated its guidance on tokenized assets and blockchain-based recordkeeping on Thursday, allowing authorized crypto companies to invest customer funds in tokenized forms under specified conditions. The change came days after the US Senate failed to advance the Digital Asset Market Clarity Act, a bill meant to split oversight of digital assets between the CFTC and the Securities and Exchange Commission.

For a holder who keeps funds with a registered crypto firm, the practical change is narrow but real. The new rules do not apply to retail investors directly. They apply to registered crypto-related entities, which can now hold some customer money in tokenized versions of traditional assets. A tokenized money market fund share, for example, would qualify only if it granted the same legal and economic rights as a conventional fund share.

The update revises FAQs the agency first issued in March. Under the new language, a tokenized asset qualifies if it "grants the holder legal and economic rights that are the same or functionally equivalent to the rights received by holders of the asset in its traditional form." The change did not identify which FAQ document or section was revised, and the full text of the updated language was not included in the announcement.

The CFTC chair did not directly link the timing of the update to the failed CLARITY vote, though he framed the change as a step to "provide regulatory clarity." The Senate's failure to advance the bill has left many in Washington expecting that Congress will not pass comprehensive crypto market structure legislation before 2027, which has pushed regulators to advance their own policies through rulemaking.

The CFTC has already submitted a crypto market regulation plan for the White House to review. The SEC has signalled it will not wait for Congress. Chair Paul Atkins said before the CLARITY vote that the agency was "ready, willing, and able" to propose rules on crypto in the absence of congressional action, and the agency proposed rules on certain investment contracts involving crypto assets in August.

What the Thursday update does not resolve is the underlying turf fight between the two regulators, the question the CLARITY Act was meant to settle. With the bill stalled, holders and issuers are likely to spend another year navigating rules written by each agency separately, with the boundary between them still unclear.