The Federal Reserve has released a report proposing that cryptocurrencies be classified as a separate asset class for initial margin requirements in the derivatives market. The report highlights the distinct volatility of floating crypto assets like Bitcoin and Ethereum, and pegged assets such as stablecoins, compared to traditional asset classes. It suggests assigning differentiated risk weights to these crypto assets and using a benchmark index to simulate market volatility. This move is part of broader efforts to integrate crypto assets into the existing regulatory framework, addressing the need for higher collateral buffers due to crypto's high volatility.