Europe’s markets regulator is seeking evidence that tokenized government bonds and other digital versions of approved collateral can be sold quickly enough to cover the default of a clearing member.

The European Securities and Markets Authority (ESMA) issued its request for evidence on October 9, 2026, ten months after US regulators began allowing futures brokers to post crypto assets as margin. ESMA’s call for evidence asks whether tokenized collateral can remain reliable when markets are under stress.

What ESMA wants central counterparties to assess

The review covers assets issued directly on distributed ledgers as well as tokenized representations of holdings that remain in traditional systems. These representations are known as “digital twins.”

ESMA directed its questions to central counterparties (CCPs), the clearinghouses that stand between buyers and sellers and absorb losses if a trading member fails. CCPs must submit their responses by January 15, 2027.

Klaus Löber, chair of ESMA’s CCP Supervisory Committee, said collateral must be high quality, legally enforceable and easy to sell. He added that it must be practically accessible during a crisis or after a clearing member defaults. That standard reflects how default management works at clearinghouses: when a member fails, losses are covered in part by selling the collateral that member posted, which is why the speed of a sale under stressed conditions sits at the center of ESMA’s questions.

Some market participants have already begun developing the infrastructure needed for tokenized collateral. Eurex Clearing, the Deutsche Börse clearinghouse, launched a distributed-ledger-technology-based collateral service in July 2025 and described it as the first service of its kind introduced by a CCP. In the first live transaction, JPMorgan moved securities from a separate custody location for PGGM, the Dutch pension investor. Eurex Clearing described the initiative in its official announcement.

In September, the Eurosystem launched Pontes, a system that allows institutions to settle tokenized-asset transactions in central bank money. ESMA said Pontes could support tokenized collateral by linking blockchain networks with settlement systems already in use.

ESMA Chair Verena Ross said the review forms part of a broader effort to create “the conditions for tokenised markets to operate safely and at scale.” She said the framework should provide clear legal rules, interoperable systems and appropriate oversight.

ESMA plans to assess CCP responses in the first quarter of 2027 before determining whether regulatory changes are necessary. By that point, the CFTC’s no-action stance will have been in place for more than a year.

US rules for tokenized collateral

In December 2025, the US Commodity Futures Trading Commission’s (CFTC) Market Participants Division and Division of Clearing and Risk issued Staff Letter 25-39 on tokenized collateral. The position was later reissued as Staff Letter 26-05, establishing a no-action stance that allows futures commission merchants to accept payment stablecoins, bitcoin and ether as margin. The CFTC’s announcement said the letters resulted from the agency’s “Crypto Sprint,” which included a pilot for using bitcoin, ether and payment stablecoins as derivatives collateral.

Derivatives clearing organizations may accept crypto assets, including stablecoins, as initial margin — collateral posted to cover potential exposures — when the collateral meets a “minimal credit, market, and liquidity risk” standard. Haircuts — deductions applied to the recognized value of collateral to account for risk — must be reviewed monthly. Brokers must maintain at least 20% against their own bitcoin and ether positions and 2% against payment stablecoins, in line with guidance for SEC-registered broker-dealers.

The original report was published by Cryptopolitan.