ESMA Seeks Feedback on Tokenized Collateral Liquidity

The European Securities and Markets Authority (ESMA) has published a consultation paper seeking feedback on the risks associated with tokenized collateral in terms of legal, liquidity, and operational aspects. This is to assess the ability of clearing houses to acquire and liquidate relevant assets during market stress and to determine whether new EU regulatory measures are needed. ESMA Chair Verena Ross stated that legal certainty, infrastructure interoperability, and appropriate regulation are necessary to create conditions for the cross-border safe operation and scalable development of the tokenized market. Tokenized collateral is entering the European clearing business, allowing banks and investors to access securities more quickly to meet margin requirements. This assessment will also review whether existing EU rules can support clearing houses in acquiring and clearing tokenized collateral in the event of member defaults. In July 2025, Eurex Clearing will launch a collateral service based on distributed ledger technology, and JPMorgan has completed its first real-time transaction for Dutch pension investor PGGM. ESMA will also evaluate the tokenized forms of assets held by traditional financial infrastructure, assets native to distributed ledgers, and their relationship with stablecoins, central bank currencies, and tokenized deposits. The European Central Bank plans to launch Pontes in September 2025 for settling tokenized asset transactions in central bank currency, connecting blockchain infrastructure with existing settlement systems.

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