On February 11, 2026, the Federal Reserve released a landmark staff research paper formally proposing that cryptocurrencies and crypto derivatives be separated from traditional financial models, classified as a distinct asset class, and assigned dedicated risk weights for initial margin requirements in the uncleared derivatives market.
This proposal isn’t just a tightening of regulations—it marks the first official recognition by the United States’ top financial regulator of the unique nature of crypto assets. The paper makes it clear that the traditional Standardized Initial Margin Model (SIMM)—whether for interest rates, equities, FX, or commodities—cannot effectively capture the extreme volatility and nonlinear risks of the crypto market. In other words, the risk management models that have served Wall Street for decades are no longer effective when it comes to digital assets.
Farewell to SIMM: A Fundamental Overhaul of Crypto Derivatives Margin Logic
Authored by Federal Reserve scholars Anna Amirdjanova, David Lynch, and Anni Zheng, the paper goes straight to the heart of the issue: the risk factors for crypto derivatives are fundamentally different from those of traditional assets. The research team divides crypto assets into two main categories—floating cryptocurrencies (including major coins like Bitcoin and Ethereum) and pegged crypto assets (such as stablecoins)—and recommends assigning differentiated risk weights to each category.
Cover page of the Federal Reserve staff working paper. Source: Federal Reserve Board
Notably, the paper proposes establishing a benchmark index composed of 50% floating digital assets and 50% pegged stablecoins. This index would serve as a proxy for crypto market volatility and collective behavior, allowing regulators to dynamically calibrate the minimum initial margin thresholds based on real-time index performance.
Crypto benchmark index, data source: Federal Reserve Board
Once implemented, this mechanism would fundamentally change the current logic for margin calculation. In traditional derivatives markets, initial margin is the collateral traders must post to cover default risk at the time of opening a position. Because of their inherent volatility, crypto assets already require higher margin ratios than equities or FX. The core of the Fed’s proposal is to stop forcing crypto assets into outdated frameworks and instead build new standards from the ground up.
Volatility Determines Risk Weights: The Case of Bitcoin and Ethereum
The Federal Reserve’s paper repeatedly emphasizes that the need for independent margin weights for crypto derivatives stems from their extreme price volatility. Take Gate’s real-time market data as an example: as of February 13, 2026, Bitcoin (BTC) was priced at $66,580.7, with a 24-hour trading volume of $768.22M, a market cap of about $1.31T, and a market dominance of 55.42%. Despite Bitcoin’s status as an institutional allocation option, its price fluctuated -1.19% in 24 hours, -30.79% over the past 30 days, and a staggering -32.51% over the past year.
Ethereum (ETH) shows similar volatility. The current price is $1,947.19, with a 24-hour trading volume of $205.33M and a market cap of $233.26B. Its 24-hour price range was $1,896.71 to $2,001.62, with a 30-day drop of -41.81% and a one-year retracement of -29.34%.
Gate’s market data model forecasts that Bitcoin’s average price for 2026 may hover around $66,054.9, with a possible range between $62,752.15 and $78,605.33. Ethereum’s expected annual average is about $1,936.98, with a range from $1,084.7 to $2,324.37. Such price behavior, when evaluated under the SIMM model, would result in severe pricing biases due to its failure to meet the normal distribution assumptions of any traditional asset class.
From Debanking to Controlled Openness: A 180-Degree Regulatory Shift
The Fed’s proposal is not an isolated event. Back in December 2025, the Federal Reserve officially overturned its 2023 guidance restricting banks’ involvement in crypto, ending the so-called "Operation Chokepoint 2.0" era of regulatory tightening. That guidance had strictly limited federally regulated banks from directly or indirectly engaging in crypto activities, making it difficult for many crypto firms to access basic banking services.
Now, the Fed not only allows banks to engage with crypto in compliance with regulations, but also suggests opening streamlined master accounts ("skinny master accounts") to crypto companies. While these accounts offer fewer privileges than traditional full master accounts, they mark the first time crypto firms could gain direct access to the U.S. central bank’s payment and settlement system.
The combination of relaxed bank access and independent margin risk weights forms a comprehensive policy package: the former addresses the entry of compliant funds, while the latter sets a standard for risk pricing. This signals that the Fed no longer views crypto as a fringe speculative tool, but as an emerging financial market deserving of a systematic regulatory framework.
Market Impact: Higher Margins as Both Cost and Protection
For traders active in crypto derivatives, the Fed’s proposal will directly affect trading costs and capital efficiency. Higher initial margin requirements mean that opening positions of the same notional value will require posting more collateral. For example, if the current margin ratio for Bitcoin futures is around 15%–20%, under the independent risk weight framework, the margin ratio for floating crypto assets could rise to 25%–30% or even higher.
In the short term, this will reduce leverage and increase hedging costs for institutions. But over the long run, stronger risk buffers will help reduce the risk of cascading liquidations during extreme market events. The core cause of several long liquidation cascades in the 2025 crypto market was insufficient margin coverage and excessive leverage. By calibrating risk weights, the Fed aims to guide the market from high-leverage, low-liquidity structures toward healthier, more resilient models with moderate leverage.
Conclusion: Crypto Derivatives Enter a New Era of Regulatory Normalization
By introducing its margin reform proposal in the form of a working paper, the Federal Reserve is both responding to the rapid expansion of the crypto market and proactively laying the groundwork for institutionalizing crypto assets. Going forward, regulatory discussions around crypto derivatives will shift from debating whether to regulate to focusing on how to design optimal oversight.
As a leading compliant crypto trading platform, Gate closely monitors regulatory developments across major global jurisdictions. Whether it’s the precise calibration of volatility models or the dynamic optimization of margin mechanisms, Gate is committed to providing users with a derivatives trading environment that meets international regulatory standards while remaining competitive in the market.
In this new era where the Federal Reserve assigns crypto assets their own regulatory framework, risk management capabilities—not sheer leverage—will become the true measure of maturity for both trading platforms and market participants.
