EU Regulators Seek Industry Nominations for Tokenized Securities Standards Group
Key Takeaways
- •The ECB, European Commission and ESMA are seeking nominations for the European Tokenisation Standards Group, an industry-led body that will draft common standards for holding and settling tokenized securities.
- •Applications to join the ETSG must be submitted by Nov. 27, with work set to begin in January 2027 and an initial set of standards due by early 2028.
- •The group aims to enable companies to hold and settle tokenized securities across different distributed ledger technology platforms and ensure those platforms connect with existing financial systems.
- •Its output will serve as a central technical input to Appia, the Eurosystem's initiative to build a blueprint for Europe's tokenized financial markets.
- •The convening institutions warned that fragmentation could limit tokenization's benefits and may recommend ways for EU authorities to encourage firms to adopt the standards.
The European Central Bank (ECB), the European Commission and the European Securities and Markets Authority (ESMA) are seeking nominations for an industry-led group that will draft common standards for the holding and settlement of tokenized securities.
Eligible applicants include EU industry associations, global institutions, private firms and fintech companies. Applications to the European Tokenisation Standards Group (ETSG) must be submitted by Nov. 27, with work scheduled to begin in January 2027, according to a release published Monday. The group's membership will be determined after the nomination deadline, and the three convening institutions — the euro area's central bank, the EU's executive branch and its securities markets regulator — will take part in the group as observers.
Under its mandate, the group will develop technical and market standards to help companies hold and settle tokenized securities across different distributed ledger technology (DLT) platforms, and to ensure those platforms can connect with existing financial systems. It aims to deliver an initial set of standards by early 2028.
The standards will support Appia, the Eurosystem's initiative to develop a blueprint for Europe's tokenized financial markets, making the group's output a central technical input to that effort. The Eurosystem consists of the ECB and the national central banks of the euro area countries.
The institutions warned that fragmentation could limit the benefits of tokenization and said the group may recommend ways for EU authorities to encourage firms to adopt its standards. Because the group is industry-led, the firms and associations selected for it will have a direct hand in drafting standards their own sector may later be encouraged to adopt.
Tokenization is the process of recording traditional financial instruments, such as bonds or fund shares, as digital tokens on DLT, the shared-database technology that underlies blockchain networks. The ETSG initiative fits into the EU's wider digital-finance agenda, which includes the Markets in Crypto-Assets Regulation (MiCA) and the DLT Pilot Regime for tokenized financial instruments.
In September, the Eurosystem launched Pontes, a system that allows financial institutions to settle wholesale transactions in tokenized assets in central bank money — another strand of the Eurosystem's work to build out Europe's tokenized financial markets.
Related: ECB President Christine Lagarde to step down in February 2027
