Regulator demands proof tokenized assets remain accessible during market turmoil
The European securities watchdog has launched a consultation to gather market input on legal, operational and liquidity challenges associated with tokenized collateral ahead of potential new regulatory requirements.
The European Securities and Markets Authority (ESMA) is requesting proof that central counterparties have the capability to retrieve tokenized collateral and convert it to liquid funds during periods of market distress.
On Friday, ESMA released a call for evidence designed to collect industry perspectives on the ramifications of using tokenized collateral in clearing operations.
"We must create the conditions for tokenized markets to operate safely and at scale across borders, with legal certainty, interoperable infrastructures and appropriate supervision," ESMA Chair Verena Ross
As financial institutions and asset managers pursue more rapid access to securities for satisfying margin obligations, tokenized collateral is making its way into operational European clearing systems. The regulator's examination aims to establish whether current EU legislation adequately ensures that clearinghouses maintain the ability to retrieve and sell off such collateral in situations where a clearing member fails to meet obligations.
Eurex Clearing rolled out a collateral service built on distributed ledger technology in July 2025. The inaugural live transaction was completed by JPMorgan on behalf of Dutch pension fund PGGM, which involved transferring securities from an alternative custody provider.
Tokenized collateral faces liquidity and ownership scrutiny
The regulatory consultation addresses tokenized versions of assets maintained within conventional financial infrastructure as well as assets originally issued on distributed ledgers. The review further investigates how these different models integrate with stablecoins, central bank digital money and tokenized bank deposits.
According to ESMA, assets that demonstrate liquidity in their traditional format may encounter additional risk factors when converted to tokens, such as processing delays stemming from redemption workflows or limitations on token transferability.
The authority additionally questioned whether the transfer of tokens actually conveys legal ownership or creates enforceable claims to the assets backing them.
The call for evidence comes after the Eurosystem introduced Pontes in September, a framework enabling financial market participants to settle transactions involving tokenized assets through central bank money. According to ESMA, Pontes has the potential to facilitate tokenized collateral structures by bridging blockchain-based platforms with conventional settlement infrastructure.