ESMA Launches Call for Evidence on Tokenized Collateral in Central Clearing

The European Securities and Markets Authority (ESMA) opened a call for evidence on Oct. 9 to explore how European Union central counterparties (CCPs) could use tokenized collateral safely and effectively ¹. The initiative examines whether distributed ledger arrangements can be integrated into the post-trade clearing lifecycle without compromising core prudential protections ¹.

ESMA's review targets several operational structures, including "digital twins"—tokenized representations of assets maintained in conventional financial infrastructures—as well as assets minted natively on distributed ledger networks ¹. Regulators are also reviewing hybrid models and their interoperability with tokenized cash and settlement instruments ¹. ESMA Chair Verena Ross noted that the consultation forms part of the regulator's push to foster cross-border tokenized markets under proper supervision and legal certainty as the sector shifts out of pilot phases ¹.

Safeguards and Default Management

A primary focus of the inquiry is whether clearinghouses can manage tokenized assets during financial stress ¹. Klaus Löber, chair of ESMA's CCP Supervisory Committee, stated that fundamental safeguards governing CCP collateral must persist, requiring assets to remain highly liquid, legally enforceable, and operationally accessible in the event of a clearing member default ¹. The regulator wants industry feedback on how CCPs would liquidate tokenized assets, segregate client holdings, and ensure settlement finality when DLT interacts with legacy post-trade rails ¹. Additionally, ESMA is asking whether tokenizing traditionally eligible assets alters their underlying risk profile ¹.

The consultation aligns with the authority's broader regulatory agenda, as ESMA Shifts Focus to Digital Innovation and Tokenization for 2027 across the European single market ¹. Feedback on the document is open through Jan. 15, 2027 ¹. ESMA plans to evaluate the submissions in the first quarter of 2027 before deciding on potential supervisory or regulatory convergence actions ¹.