Commodity Futures Trading Commission Chair Michael Selig has urged U.S. financial regulators to prepare for “mass tokenization,” arguing that blockchain-based markets, stablecoins, artificial intelligence and 24/7 trading could reshape market infrastructure more rapidly than the changes seen over recent decades.
Speaking Tuesday at a U.S. Treasury Market conference hosted by the Federal Reserve Bank of New York, Selig described tokenization and onchain finance as developments that are moving closer to regulated financial venues. His remarks place the CFTC alongside the Securities and Exchange Commission in adapting existing market rules for assets and trading systems that operate on distributed ledgers.
Selig’s comments come as federal agencies take narrower, practical steps around continuous trading, collateral and tokenized securities even while a comprehensive cryptocurrency-market bill remains stalled in the Senate. The emerging approach is fragmented, but it increasingly addresses the operational parts of digital finance that institutions would need to use blockchain-based products within U.S. regulatory frameworks.
CFTC examines round-the-clock derivatives markets
The CFTC has already begun considering how traditional market safeguards would function if trading moved beyond conventional market hours. Over the past year, the agency issued guidance and requested public comment on the possibility of 24/7 trading in energy derivatives markets.
Energy derivatives are contracts used to manage or take positions on changes in prices for commodities such as oil, natural gas and electricity. Many of these markets have established trading schedules, settlement processes and surveillance systems built around specific operating hours. A continuous model would require regulators and market operators to assess how margin calls, price limits, liquidity disruptions and technical outages should be handled overnight and over weekends.
The consultation does not establish a universal 24/7 derivatives market. It does show that the CFTC is examining whether its current rules can accommodate a trading model already familiar to cryptocurrency markets, where Bitcoin, stablecoins and other digital assets can change hands at any hour.
For regulated derivatives venues, extending trading hours involves more than keeping an order book open. Clearinghouses must be able to calculate collateral requirements continuously, brokers need procedures for managing customer risk outside business hours, and surveillance teams need systems capable of responding to abrupt moves at any time.
Stablecoins enter the collateral discussion
In February, the CFTC expanded its list of eligible collateral to include stablecoins issued by national trust banks. The move broadened the range of assets that may be posted in regulated derivatives markets under the commission’s framework.
Collateral is the asset that a market participant deposits to support a derivatives position and cover potential losses. Cash and highly liquid securities have historically filled that role because their value and legal treatment are relatively well understood. Stablecoins are designed to maintain a fixed value, commonly against the U.S. dollar, but their suitability as collateral depends on the quality of their reserves, redemption mechanisms, custody arrangements and issuer oversight.
By limiting the policy change to stablecoins issued by national trust banks, the CFTC linked eligibility to a particular regulated issuer structure rather than treating all dollar-pegged tokens as interchangeable. That distinction may shape which products institutions consider for collateral use and which issuers seek bank-like regulatory status.
The policy also connects to the operational appeal of blockchain settlement. Token-based collateral could, in theory, move between approved parties outside traditional banking windows, matching the demands of markets that may operate continuously. The regulatory challenge is ensuring that transfer speed does not weaken controls over valuation, custody, defaults or concentration risk.
SEC focuses on tokenized stock trading
The Securities and Exchange Commission last week released an “innovation exemption” intended to support onchain trading of tokenized stock, according to the supplied material. Tokenized stock generally refers to a blockchain-based representation of an equity security or an interest connected to one.
The SEC’s initiative and the CFTC’s work address different parts of the financial system. The SEC oversees securities markets, while the CFTC regulates derivatives and certain commodities-related markets. Together, the actions suggest that agencies are addressing how blockchain technology could be used in market infrastructure without waiting for Congress to settle every unresolved question in cryptocurrency legislation.
That incremental route has limits. A Senate delay on a wider crypto-market structure bill leaves major questions around jurisdiction, issuer obligations, trading-platform rules and consumer protections subject to existing laws and agency-specific initiatives. Firms seeking to offer tokenized financial products would still need to determine which rules apply to the underlying asset, the token structure, the platform and the custody arrangement.
Tokenization moves from concept to market plumbing
Tokenization has often been discussed as a way to make financial assets easier to transfer, divide into smaller units or settle more quickly. Selig’s framing at the Treasury Market conference points toward a larger issue: whether market infrastructure can handle assets that trade and settle across interconnected systems at all hours.
For U.S. regulators, that work reaches beyond cryptocurrency trading. Treasury markets, equities, derivatives and collateral systems rely on established intermediaries, legal records and settlement cycles. Bringing blockchain-based processes into those markets would require clear rules on ownership records, transfer finality, cybersecurity, data access and the responsibilities of firms operating the technology.
Artificial intelligence adds another layer to that policy agenda. As trading, surveillance and risk-management tools become more automated, regulators may face a market structure where algorithmic systems operate continuously alongside tokenized collateral and onchain settlement mechanisms.
Selig’s call for preparation does not amount to an immediate overhaul of U.S. markets. The CFTC’s recent steps are targeted rather than sweeping, and the SEC’s tokenized-stock initiative remains separate from legislation that could establish a more unified framework. Yet the direction of travel is increasingly clear: federal agencies are beginning to adapt the mechanics of regulated markets for a system in which digital assets and conventional financial instruments may share more of the same infrastructure.
Explore how Wall Street is already adapting to tokenized assets in our latest analysis on tokenised stocks adoption trends.
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