Federal Reserve Proposes New Classification for Cryptocurrencies in Derivatives Trading

The U.S. Federal Reserve has proposed categorizing cryptocurrencies as a separate asset class in the realm of uncleared derivatives trading. According to NS3.AI, this recommendation comes in response to the high volatility associated with digital currencies such as Bitcoin and Ethereum. The Fed suggests implementing higher margin requirements and differentiated risk weights for these volatile cryptocurrencies compared to stablecoins. Furthermore, it has proposed the creation of a benchmark index that combines both volatile cryptocurrencies and stablecoins to enhance the assessment of market volatility and risk.