The European Securities and Markets Authority (ESMA) has launched a call for evidence on whether, and under what conditions, European Union central counterparties (CCPs) could safely use tokenised collateral. The exercise does not seek to expand the categories of eligible collateral. It examines whether tokenisation changes how otherwise eligible assets are mobilised, transferred, protected, managed and realised, and whether existing regulatory and supervisory frameworks remain adequate. The review covers digital twins of assets held in traditional infrastructures, assets issued directly on distributed ledger technology and hybrid models, including interactions with tokenised cash and other settlement assets. ESMA is focusing on whether CCPs could access and convert collateral into liquidity during stress or a clearing member default. It is also examining legal enforceability, segregation and client protection, settlement finality, liquidity and haircuts, operational and cyber resilience, interoperability, concentration risk and the alignment of tokenised and traditional records. Tokenisation should not weaken existing safeguards requiring CCP collateral to be high quality, legally enforceable, highly liquid and operationally available under stressed conditions. ESMA plans to assess the evidence in the first quarter of 2027 and will then determine whether regulatory or supervisory convergence action is warranted.
European Securities and Markets Authority seeks evidence on safe use of tokenised collateral by central counterparties
The European Securities and Markets Authority is seeking evidence on whether European Union central counterparties can safely use tokenised forms of otherwise eligible collateral. The review covers legal certainty, liquidity, default management, client protection, operational resilience and interoperability across digital twin, native and hybrid models. ESMA will assess the evidence in the first quarter of 2027 before deciding whether regulatory or supervisory action is needed.