ESMA Consults on Assessing Tokenized Collateral's Liquidity During Crises

The European Securities and Markets Authority (ESMA) has published a consultation paper seeking industry feedback on the legal, liquidity, and operational risks of tokenized collateral, in order to assess whether clearing institutions can obtain and liquidate such assets under 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 needed to create the conditions for the safe cross-border operation and scaling of tokenized markets. Tokenized collateral is entering European clearing operations, enabling banks and investors to obtain securities more quickly to meet margin requirements.The assessment will also examine whether current EU rules can support clearing institutions in obtaining and liquidating tokenized collateral in the event of a member default. In July 2025, Eurex Clearing launched a collateral service based on distributed ledger technology, and JPMorgan completed its first real-time transaction for Dutch pension investor PGGM.ESMA will also assess tokenized forms of assets held by traditional financial infrastructure, assets natively issued on distributed ledgers, and their relationship with stablecoins, central bank money, and tokenized deposits. The European System of Central Banks launched Pontes in September 2025 to settle tokenized asset transactions in central bank money, and to connect blockchain infrastructure with existing settlement systems. (Cointelegraph)