Federal Reserve proposes new margin framework for crypto derivatives

The Federal Reserve has proposed a new margin scheme that would treat cryptocurrencies as an asset class of their own, aiming to better manage crypto's high price volatility and address risks tied to derivatives, where traders borrow funds and post collateral ^[1].

A Fed paper accompanying the proposal sets out initial margin weights for crypto-linked derivatives and warns that traditional risk-weightings and models cannot fully capture crypto’s volatility or market behavior, prompting the need for tailored margin requirements ^[2].

The proposal arrives amid broader regulatory debates over digital-asset rules, including concerns about a ‘stablecoin recovery gap’ in proposed legislation and calls from the banking lobby to delay approval of crypto bank charters, underscoring continued scrutiny of crypto-sector oversight ^[3][4].

Regulators view the margin framework as a tool to create a safer, more stable trading environment for crypto derivatives while other regulatory issues for digital assets remain under active review ^[1][2][3][4].