ESMA seeks evidence tokenized collateral can be cashed out in crisis

Tokenized collateral is entering live European clearing operations as banks and investors seek faster access to securities to meet margin requirements. ESMA’s review will help determine whether existing EU rules can ensure clearinghouses can access and liquidate such collateral when a member defaults.

In July 2025, Eurex Clearing introduced a collateral service based on distributed ledger technology. JPMorgan executed the first live transaction for Dutch pension investor PGGM, moving securities from another custody location.

Tokenized collateral faces liquidity and ownership scrutiny

The consultation covers tokenized representations of assets held in traditional financial infrastructure and assets issued directly on distributed ledgers. It also examines how those models interact with stablecoins, central bank money and tokenized deposits.

ESMA said even assets that are liquid in traditional form may face additional risks when tokenized, including delays caused by redemption procedures or restrictions on transfers.

It also asked whether token transfers confer ownership or enforceable rights over the underlying assets.

The consultation follows the Eurosystem’s September launch of Pontes, a system allowing financial institutions to settle tokenized asset transactions using central bank money. ESMA said Pontes could support tokenized collateral arrangements by connecting blockchain-based infrastructure with existing settlement systems.