US Fed proposes classifying crypto as separate asset class for derivatives

The U.S. Federal Reserve has proposed classifying cryptocurrencies as an independent asset class within the market for uncleared derivatives, which are trades conducted without a central clearinghouse like an exchange, Cointelegraph reported. In a working paper, the Fed stated that cryptocurrencies are significantly more volatile than traditional asset classes and do not align with the risk categories of the current asset classification model (SIMM). The central bank also suggested that traders should be required to post higher margin deposits to prevent liquidations. The paper further recommended applying separate risk weights for volatile cryptocurrencies like BTC and ETH versus pegged assets such as stablecoins. The Fed noted that creating a benchmark index composed of a 50/50 mix of volatile cryptocurrencies and stablecoins could lead to more accurate calculations of market volatility and appropriate risk weights for crypto assets.