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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →ESMA has not concluded that tokenised collateral can—or cannot—be turned into cash during a clearing crisis. On 9 October 2026, the European Securities and Markets Authority opened a call for evidence on whether EU central counterparties can use tokenised collateral safely, including after a clearing member defaults. Responses are due by 15 January 2027; ESMA plans to assess them in Q1 2027 before deciding whether further action within its remit is appropriate.
What ESMA is asking
A central counterparty (CCP) stands between the buyers and sellers of certain financial trades, managing the risk that a clearing member fails to meet its obligations. It collects collateral to cover current and potential future losses. If a member defaults, the CCP may need to transfer, sell, repo or otherwise realise collateral as part of managing the default.
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ESMA’s practical question is whether a CCP can get control of tokenised collateral and convert it into usable funds, in the required currency and timeframe, under both normal and stressed conditions. That involves more than whether a token can be transferred on a ledger: the legal rights, custody arrangements, settlement route, liquidity and dependencies must work together.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe call examines tokenisation across the collateral lifecycle: mobilisation, transfer, management, protection and realisation. It is not a proposal to expand or reassess which categories of assets are eligible as CCP collateral. ESMA is asking whether existing requirements and supervision can accommodate tokenised arrangements safely.
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Two models—and the difference between them
“Tokenised collateral” can describe arrangements with quite different links to conventional financial infrastructure. ESMA identifies two broad models, while noting that hybrids are possible.
| Model | How it works | Key crisis question |
|---|---|---|
| Digital twin | A token represents or facilitates the use of an asset that remains held and recorded in conventional custody, settlement or central securities depository infrastructure. | How does the token record reconcile with the underlying record, and which record prevails if they disagree? Can the asset still be transferred or realised through the conventional infrastructure when needed? |
| Natively issued asset | Issuance, holding, transfer and collateral operations take place directly in a distributed ledger technology (DLT) environment. | Can the ledger, connected settlement assets, available liquidity and any intermediaries deliver funds reliably? What happens if a necessary platform or connection is unavailable? |
| Hybrid arrangement | Combines features of digital twins and natively issued assets and may connect with tokenised cash or other settlement assets. | Do the different records, platforms and settlement mechanisms work together, including during a disruption? |
The relevant comparison is not simply “blockchain versus traditional finance.” A token may make an asset easier to identify or allocate while leaving its sale dependent on a custodian or securities depository. A native ledger arrangement may avoid some conventional steps but rely more heavily on its own transfer, settlement and liquidity mechanisms. The outcome depends on the specific arrangement.
Why a clearing-member default is the test
Collateral is useful in a default only if the CCP can access it and put its value to work in time. The sequence can involve establishing the CCP’s rights, taking control of the asset, transferring it, and then selling it, arranging a repo or using another route to obtain funds. A failure or delay at any link can matter even if the underlying security is normally liquid.
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For each arrangement, the evidence needs to establish:
- what legal right the CCP receives when the collateral is posted, and whether it can enforce that right in an insolvency or across relevant national borders;
- which record establishes ownership or control, particularly if a token is linked to an asset held in conventional custody;
- when a transfer is legally final and irrevocable, and whether that is the same point at which the CCP treats collateral as posted;
- which custodian, platform, issuer, settlement asset or other intermediary must be available to transfer or realise the asset;
- how the asset can be converted into usable funds, in the currency and timeframe required for default management; and
- whether those steps remain dependable during market stress, technology disruption or the failure of a service provider.
These are open questions, not findings that tokenisation makes a traditionally liquid asset illiquid or that DLT necessarily improves or worsens cash access. The test is whether a particular arrangement can deliver value legally and operationally when a CCP needs it.
Legal rights, records and client protection
A token’s classification as a financial instrument does not, by itself, establish that a DLT record creates or transfers property rights. ESMA asks whether the rights represented by tokens are enforceable under the applicable law, including in insolvency and across borders. The legal analysis must match the actual structure rather than assume that possession of a token automatically gives the holder control of the underlying asset.
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For digital twins: identify the authoritative record
Where a token corresponds to an asset held elsewhere, the arrangement needs a clear reconciliation process. It should be evident whether the token record or the conventional custody or depository record prevails if they diverge, and how a discrepancy is detected and resolved. Without that clarity, the CCP may face uncertainty about what it controls precisely when it needs to act.
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ESMA asks whether segregation is legally effective as well as technically implemented. It also asks whether client positions and collateral can be ported after a clearing-member default, and whether transfers are legally final and irrevocable at the point the CCP counts the collateral as posted. A technical system may show that a token moved; the applicable legal framework still determines what that movement means for ownership, control and insolvency protection.
Liquidity, redemption and settlement assets
For tokenised securities, the question is whether tokenisation changes how quickly and reliably the security can be sold or used in a repo, especially under stress. A bond’s market liquidity does not automatically establish that a token representing it can be converted into funds just as readily. A redemption step, a platform restriction, a required settlement asset or weak links to the wider financial system could add friction.
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Those features may be relevant to eligibility safeguards, haircuts or other protections, but the call does not announce a haircut change or establish a measured effect. ESMA reports no conversion-time measurements, crisis success rates or quantified liquidity outcomes in the call.
Tokenised cash-like assets present a separate issue: whether the asset can legally discharge the relevant obligation and whether the CCP can reliably access the currency it needs. ESMA names tokenised central-bank money, stablecoins, e-money tokens and tokenised deposits as possible settlement assets. They are not necessarily treated as equivalent to cash under regulatory or supervisory frameworks, and stablecoins may deviate from par. Relevant considerations include redemption rights, issuer credit, conversion arrangements and the robustness of the infrastructure.
Operational resilience goes beyond ledger uptime
ESMA’s resilience questions cover continuity of margin collection, collateral management, payments and default management—not just whether a ledger remains online. A functioning token platform would not be enough if a custodian, payment connection, settlement asset or other critical service were unavailable.
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The call raises governance, information and communications technology (ICT) and cyber risks, dependencies on external providers, recovery and fallback arrangements, testing and scenario analysis. It asks what should count as a critical dependency and what assurance and testing should be required before CCPs rely more broadly on tokenised collateral. Useful evidence would show how the whole chain performs in realistic, extreme-but-plausible scenarios, including how operations recover if a key component fails.
Potential effects on market-wide liquidity
Faster settlement, automation, programmability and continuous processing could improve efficiency. They could also leave participants less time to source collateral and increase intraday liquidity needs. Automated rules may prompt many participants to make calls or transfers at the same time during stress, concentrating demand on the same assets or sources of liquidity.
These are risks ESMA intends to examine, not quantified outcomes demonstrated by the call. Their significance depends on how a system is designed and how participants, settlement assets and infrastructure behave together.
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What happens next
Stakeholders can respond to ESMA’s call for evidence online by 15 January 2027. ESMA says it will assess the feedback in Q1 2027 and then decide on a course of action, which could include regulatory or supervisory convergence measures within its remit. Responses are expected to be published after the call closes unless a respondent requests otherwise.
ESMA says that, based on work through EMIR CCP supervisory colleges, HQLAᵡ was the only project in central clearing it had seen by the time it finalised the call. That statement is specifically about central clearing; it should not be read as saying it was the only tokenisation project across financial markets.
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