SS #55 - CFTC Approves Crypto Collateral including USDC for Derivatives Trading

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Entering the second week of December, the regulatory landscape for stablecoins is undergoing rapid transformation as the US Commodity Futures Trading Commission (CFTC), acting under the GENIUS Act, launched a pilot program allowing select futures commission merchants to utilize major cryptocurrencies and stablecoins, specifically Bitcoin (BTC), Ethereum (ETH), and USD Coin (USDC) as margin collateral for derivatives trading under strict new regulatory guardrails. This development is notably bullish for USDC, validating its role in regulated finance, and is further complemented by the strategic expansion of both Circle and Tether, which have secured licenses from the Abu Dhabi Global Market (ADGM), underscoring the increasing institutional acceptance and formal integration of stablecoins into the global financial ecosystem.

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In Today's Edition:

• Headline: CFTC Approves Crypto Collateral including USDC for Derivatives Trading

• Quick Bites: Circle and Tether Get Abu Dhabi’s ADGM License

• Yield of the Week: 58.21% APY on Treeve

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HEADLINE

CFTC Approves Crypto Collateral including USDC for Derivatives Trading

State of play: The CFTC has initiated a digital assets pilot program, enabled by the GENIUS Act, which permits select futures commission merchants to use major cryptocurrencies and stablecoins (BTC, ETH, USDC) as margin collateral for derivatives trading under strict new regulatory guardrails.

• BTC, ETH, and payment stablecoins (like USDC) can now be used as margin collateral for futures and swaps by eligible Futures Commission Merchants (FCMs).

• The program establishes clear regulatory oversight with enhanced monitoring, weekly disclosures, and the withdrawal of outdated restrictive 2020 guidance.

• This creates a formal framework for tokenized collateral, including Real-World Assets (RWAs) like U.S. Treasuries, signaling broader support for on-chain finance.

What’s Next: USDC demand will immediately rise as regulated FCMs adopt it for efficient, 24/7 collateral movements, favoring its compliance status. The operational speed of USDC settlement will put pressure on traditional markets to accelerate their collateral processes. The CFTC will likely expand the acceptable limits for USDC collateral after the initial monitoring phase proves its stability.

Why it Matters: Formal CFTC approval validates USDC as a highly trusted digital cash equivalent for institutional finance. Using USDC for margin significantly reduces counterparty and settlement risk by enabling real-time, atomic transactions. This move strengthens the US dollar's dominance by embedding its digital form as a core component of efficient global derivatives trading.

Our Take: This is a definitive institutional endorsement for USDC, requiring its issuer, Circle, to scale up their custody and reserve reporting capacity immediately. FCMs must prioritize integrating USDC infrastructure to achieve capital efficiency and gain a competitive edge in derivatives pricing. The industry must now ensure other stablecoin issuers meet USDC's high regulatory standards to participate in this new institutional collateral market.

QUICK BITES

• Stable launches mainnet and native token.

• Tether-backed payments startup Oobit expands into US.

• Study finds euro stablecoin market cap doubles in year after MiCA.

• Circle secures Abu Dhabi’s ADGM license in Middle East expansion.

• Tether gains Abu Dhabi's approval to expand USDT use across nine major chains.

• MoneyGram taps Fireblocks to handle stablecoin settlements for the remittance giant.

• Circle partners with Bybit in push to drive USDC adoption outside Coinbase ecosystem.

• Tether joins $80M funding round for Italian humanoids built for high-risk industrial jobs.

YIELD OF THE WEEK

Upshift earnAUSD: 12.31% APY

• The Uphift earnAUSD vault on Monad allows users to deposit the liquid yield token AUSD, where the platform automatically allocates the funds across various decentralized finance opportunities to achieve an optimized, risk-adjusted yield.

• The vault currently operates with a transparent fee structure, charging no fees for withdrawals, performance, or platform usage, although deposits are subject to a four-day withdrawal period.

• To incentivize participation, the earnAUSD pool offers weekly rewards consisting of Upshift points and an allocation of 50,000 AUSD.

Ember Basis Vault: 15.75% APY

• The MEV Capital Basis Vault on Ember executes a delta-neutral basis trading strategy by using USDC to purchase assets, supplying them to Spot and Lending protocols on Sui, and simultaneously shorting the perpetual contracts on Bluefin Pro.

• This strategy aims to capture yield from two sources: the supply yield generated by the lent assets and the funding payments received from the short perpetual positions.

• Users participating in the vault are subject to a 10% performance fee on their profits and must adhere to a two-day waiting period for withdrawals.

Treeve splUSD: 58.21%

• Trevee Earn on Plasma has introduced the tokens plUSD and splUSD, which are designed to offer competitive staking yields to users through their integration with the Midas Vaults Infrastructure.

• The protocol directs all deposited stablecoins, initially minted as plUSD using USDT, into a Midas vault on Plasma mainnet, where specialized curators allocate the funds to audited, whitelisted DeFi strategies on protocols such as Aave and Fluid.

• The yield generated by these farming activities is continuously auto-compounded within the Midas vault, swapped back into stablecoins, and then used to mint new plUSD tokens that are distributed as auto-compound rewards to the splUSD staking contract.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.