ESMA asks if tokenised collateral can work in EU clearing

ESMA has opened a call for evidence on whether EU clearing houses can safely use tokenised collateral, with a focus on whether it can be accessed and turned into cash if a member defaults. The European Securities and Markets Authority announced the review on 9 October and set a 15 January 2027 deadline for responses, according to ESMA’s announcement. A central counterparty, or CCP, stands between buyers and sellers to manage the risk that one side fails to meet its obligations.

Tokenisation means representing an asset digitally on a distributed ledger, a shared record system. ESMA says its review is about how already eligible assets are transferred, managed and protected in tokenised form. It is not a proposal to expand the types of assets CCPs can accept as collateral.

What kinds of tokenised collateral is ESMA examining?

ESMA is examining tokenised copies of assets held in traditional systems, assets issued directly on a ledger, and hybrid models, according to its call for evidence. A tokenised copy, sometimes called a “digital twin”, may represent an asset whose official ownership record remains elsewhere. In a native model, the asset is issued and transferred on the ledger itself.

The authority is asking how these models would work through the collateral process, from posting and monitoring to substitution and release. It also wants views on tokenised cash and other settlement assets that could interact with tokenised collateral.

What happens if a clearing member defaults?

ESMA wants to know whether a CCP could take control of tokenised collateral, transfer it and convert it into usable funds quickly in a default. The call also raises legal questions: whether ownership rights are clear, client assets stay protected and transfers are final when ledger systems connect with traditional market infrastructure.

ESMA says tokenisation may make some transfers more automated, but it does not remove the underlying legal, credit, market, liquidity or operational risks. Its call asks respondents to explain possible delays and dependencies, including when an asset must move between a ledger and a custodian or central securities depository.

When will ESMA decide what to do?

ESMA will assess responses in the first quarter of 2027 and then decide whether regulatory or supervisory action is needed. The call is aimed at CCPs, clearing members and clients, market infrastructure firms, and providers of tokenisation or ledger technology. ESMA says responses will be published after the deadline unless respondents ask for them to remain confidential.

Sources and documents

• ESMA’s announcement — esma.europa.eu
• its call for evidence — esma.europa.eu