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Question #388

Why is the CFTC pilot program allowing Bitcoin as collateral for derivatives trading significant for institutional investors?

Category: General
It provides certainty and reduces counterparty risk for institutions trading Bitcoin derivatives.
It increases collateral requirements making Bitcoin derivatives trading less attractive for institutions.
It forces institutions to register with the CFTC reducing their operational flexibility.
It mandates institutions to mine Bitcoin using CFTC approved hardware devices only.

Why is this the correct answer?

This is correct because a regulated pilot program that accepts Bitcoin as collateral gives institutions a clear legal framework. When DeFi protocol.">collateral is formally recognized by the CFTC, traders face less uncertainty about counterparty defaults. This legal clarity and risk reduction are essential for large funds and banks to confidently enter or expand their Bitcoin derivatives positions.

Related Terms

Collateral 6 DeFi 2

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Important Notice: This content has been generated with the assistance of artificial intelligence. While we strive for accuracy, there may be errors or inaccuracies in the information provided. Please exercise caution and verify any information before making decisions based on it. This information does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should not treat any of the content as such. CryptoMeteo does not recommend that any cryptocurrency should be bought, sold, or held by you. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions.

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