ISDA publishes whitepaper on accounting treatment for tokenized collateral

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

ISDA has released a whitepaper addressing how firms should account for tokenized collateral used in derivatives and securities financing transactions. The paper covers both traditional OTC and cleared structures and newer DLT-enabled arrangements, giving compliance and accounting teams an early reference point as tokenized collateral use grows.

• ISDA's whitepaper analyzes gross versus net balance sheet presentation considerations under both IFRS and US GAAP.
• The analysis covers tokenized representations of money market funds, government securities and other high-quality liquid assets used as collateral.
• The paper addresses traditional bilateral OTC and centrally cleared structures as well as emerging DLT-enabled structures.
• ISDA states the analysis focuses on individual product types, derivatives and SFTs, and does not address cross-product netting arrangements.

Executive summary

ISDA has published a whitepaper titled "Accounting for Tokenized Assets as Collateral," addressing the use of tokenized assets as collateral for derivatives and securities financing transactions (SFTs). The association describes the use of such collateral as an emerging development in…

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