Blockchain Association Hands the CFTC a Blueprint for Onshore Tokenized Markets
Eleven reforms reportedly went to the CFTC on July 9, per cryptotimes.io. Ten of them are plumbing.
The Blockchain Association's comment letter, filed in response to the agency's fintech RFI (RIN 3038-ZA24), reads for most of its length like exactly what a principles-based regulator asks for: dry, technical requests to update rules written for markets that close at 5 p.m. and settle T+2.
Then there is the fifth ask, which is not a modernization request at all. It is a boundary.
Ten of the eleven asks are plumbing a principles-based agency can work through one rule at a time. The fifth is a boundary, not a modernization request.
Start with the substance, because the substance is real. The most concrete request in the letter targets CFTC Regulation 23.156, the rule enumerating eligible collateral for uncleared swap margin.
Payment stablecoins currently sit outside that enumerated list. The Association asks the Commission to consider rulemaking or coordinated guidance that would admit qualifying stablecoins where they meet objective standards — full reserve backing, legally enforceable redemption rights, transparent reserve reporting, operational resilience, and appropriate custody and transfer controls.
This is defensible. The argument the letter makes is genuinely narrow: the question is not whether collateral lives on a blockchain but whether it satisfies the same risk standards as a traditional financial asset. If a stablecoin clears those tests, the ledger it rides on is beside the point.
A regulator built on functions and outcomes can absorb that without theatrics. The Commission already issued tokenized-collateral guidance; extending the logic to reserve-backed stablecoins is an incremental step inside an existing framework, not a leap.
The same holds for the recordkeeping ask. The letter argues that on-chain records should satisfy books-and-records obligations when they are complete, searchable, immutable, and accessible to regulators.
That is a testable claim. Either the ledger produces auditable records that meet the standard or it does not — and the standard itself does not move.
And the 24/7 request follows the same shape. CFTC rules still assume end-of-day processes; blockchain networks run continuously; the Association asks that regulated firms be permitted to demonstrate compliance through real-time margining and automated settlement instead of legacy batch cycles.
To its credit, the letter does not pretend this is free. It flags smart contract vulnerabilities, oracle failures, validator risks, and private-key management as new hazards the Commission should address directly. That is an honest accounting, not a sales pitch.
So far, so grantable. These are collateral-and-recordkeeping asks a principles-based agency can quietly work through, one rule at a time, testing each function against the same risk bar it already applies.
Then comes the sentence that does different work.
"Neutral technology providers – including front-end interfaces, self-custody wallets, APIs, and software tools – should not be treated as intermediaries when they do not perform intermediary functions."
Read quickly, that is a truism. Nobody thinks a text editor is a broker. Of course a thing that does not perform an intermediary function should not be regulated as an intermediary.
But look at what the sentence actually asks the Commission to do. It is not asking the CFTC to test each front-end and wallet against the intermediary definition case by case. It is asking the agency to grant a category — "neutral technology providers" — in advance of that test.
The rest of the letter is a series of requests to apply a standard. This one is a request to concede a boundary.
The tell is that the letter itself supplies the counter-standard. Firms performing regulated activities — custody, brokerage, clearing, market operation — should remain subject to CFTC oversight regardless of whether they run on blockchain or legacy rails.
So the letter contains both propositions at once: neutral providers sit outside the perimeter, and anyone performing a regulated function sits inside it. The entire fight lives in the word "when."
When is a self-custody wallet performing custody? When does a front-end become a market operator? When does an API cross from routing information to routing orders in a way that constitutes brokerage?
Those are precisely the questions the Commission would be conceding rather than testing if it accepted "neutral technology provider" as a recognized category. The carve-out does the deciding in advance and labels the answer neutral.
And the Association knows how to disclaim a contested question when it wants to. In its February perpetuals petition, it reportedly drew a careful line: "nothing in this petition should be read as expressing a view on the appropriate regulatory treatment of on-chain decentralized perpetual exchanges."
That is what deliberate scope restraint looks like. The perp petition asked for narrow, practical relief — treating perpetuals like the futures they structurally resemble — and explicitly refused to opine on the decentralized case.
The fifth ask in the RFI letter does the opposite. It reaches for the contested case and bundles it with the uncontroversial ones.
That bundling is the maneuver. Reg 23.156 is a clean, technical fix with an objective test attached. On-chain recordkeeping is a clean, technical fix with an objective test attached. Placed alongside them, the neutral-provider sentence borrows their reasonableness — a contested liability boundary riding through on the strength of the plumbing around it.
Which brings us to the letter's closing request, and the trap inside it.
The final ask is that the CFTC continue harmonization with the SEC so that participants "face consistent standards regardless of which agency has jurisdiction over a given product or activity."
Consistency is the stated goal. But watch what happens when you combine "regulate the function, not the technology" with two agencies applying it independently.
The principle does not specify outcomes. It specifies a method: identify the function, regulate accordingly. Two regulators can run that identical method on the identical software and reach opposite conclusions about which function is being performed.
The SEC could look at a front-end and see the facilitation of securities transactions. The CFTC could look at the same front-end and see a neutral tool that routes commodity derivatives. Same code, same "function not technology" logic, two verdicts.
That is not harmonization. That is a seam.
And a seam is exactly what sophisticated participants organize around. The contrast worth drawing here is not the one running elsewhere in the market — which rail wins, SWIFT or crypto. The tension here is whether a single principle survives being applied by two agencies to one piece of software.
If it does not, the neutral-provider category stops being a consistency mechanism and becomes an arbitrage instrument: build the software so that whichever regulator's version of the function test is more favorable is the one that plausibly applies.
The physical stakes are not abstract. This is a fight over which US-based operations get built, and where. Injective, reportedly a July member spotlight for the Association per the Blockchain Association, maintains a New York City presence and has grown its US institutional engagement since January 2025 — the kind of onshore footprint the whole letter is meant to protect.
Keeping that footprint onshore is a legitimate goal, and ten of these eleven asks advance it honestly. The Commission can and should grant the collateral fix, the recordkeeping recognition, the 24/7 adaptations. Each comes with a standard it can hold firms to.
The fifth ask comes with a category instead. The Commission should treat it as separable from the rest — not because neutral technology should be regulated as an intermediary, but because deciding who counts as neutral is the whole question, and it is not one the agency should answer by ratifying a label.
Grant the plumbing. Test the boundary.