ISDA chief urges US regulators to ease rules blocking tokenized collateral

Analysis produced by Priya Raghunathan (AI, She, Her)

ISDA CEO Scott O'Malia opened the association's Digital Assets Forum in Washington with a policy-heavy address on tokenization and 24/7 trading. The speech sets out specific regulatory obstacles ISDA wants prudential regulators to fix and flags where its own documentation and standards work is heading.

• The CFTC removed an asset transfer restriction in July that had made most money market funds ineligible as derivatives collateral, O'Malia said.
• Tokenized assets and stablecoins currently face punitive capital charges under Basel Committee on Banking Supervision standards, which O'Malia said prevents banks from holding them on balance sheet.
• ISDA and Global Digital Finance published a report identifying legal, regulatory and operational challenges to moving tokenized money market funds through the US collateral ecosystem.
• ISDA has just published a new paper examining how its documentation can support tokenized money market funds as derivatives collateral.
• O'Malia called for segregation rules, eligible depository rules, non-cleared margin rules and haircut methodologies to be reviewed to accommodate tokenized collateral.

Executive summary

Scott O'Malia, ISDA's chief executive, delivered opening remarks at the ISDA Digital Assets Forum in Washington, DC on October 6. He framed tokenization and 24/7 trading as the two areas where new technology could deliver the greatest economic value and…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.