The European Securities and Markets Authority (ESMA) is asking for industry input on the risks associated with tokenized collateral, particularly its liquidity and operational challenges during market stress. ESMA published a call for evidence to gather feedback on whether clearinghouses can access and convert tokenized collateral into cash when markets face turmoil. The authority emphasized the need for legal certainty, interoperable infrastructure, and appropriate oversight to ensure safe and scalable operations across borders. Tokenized collateral is being used in live European clearing operations as banks and investors seek faster access to securities for margin requirements. In July 2025, Eurex Clearing introduced a tokenized collateral service using distributed ledger technology, with JPMorgan executing the first live transaction for a Dutch pension fund. The consultation also examines how tokenized assets interact with stablecoins, central bank money, and tokenized deposits. ESMA noted that even traditionally liquid assets may face additional risks when tokenized, including delays from redemption processes or transfer restrictions. The review follows the Eurosystem’s September 2025 launch of Pontes, a system enabling financial institutions to settle tokenized asset transactions using central bank money. ESMA said Pontes could help connect blockchain-based infrastructure with existing settlement systems.
The consultation covers both traditional financial infrastructure and assets directly issued on distributed ledgers. It also asks whether token transfers confer ownership or enforceable rights over the underlying assets. ESMA’s review aims to determine if current EU rules can ensure clearinghouses can access and liquidate tokenized collateral in case of a member state default.
ESMA Chair Verena Ross highlighted the importance of creating conditions for tokenized markets to operate safely and at scale, with legal certainty and appropriate supervision. The authority is seeking input to decide whether additional regulatory measures are needed to address the risks of tokenized collateral in crisis situations.