The Federal Reserve proposes setting initial margin requirements for cryptocurrency derivatives.

The Federal Reserve released an analysis report on Wednesday suggesting that cryptocurrencies should be classified as an independent asset class for the purpose of "unsettled" derivatives market initial margin requirements, including over-the-counter transactions and trades not cleared through central clearinghouses. The report points out that the volatility of floating crypto assets such as bitcoin and ethereum, as well as pegged crypto assets like stablecoins, is significantly different from traditional asset classes, making it impossible to apply the existing standardized margin model's risk classification. The authors recommend setting differentiated risk weights for the two types of crypto assets and simulating market volatility by constructing benchmark indices to calibrate risk weights. The initial margin mechanism requires traders to pledge collateral to guard against default risk, and the high volatility of crypto assets necessitates a higher proportion of collateral buffer. The report shows that the U.S. federal level is making technical preparations for incorporating crypto assets into the regulatory framework.