The European Central Bank (ECB), the European Commission and the European Securities and Markets Authority (ESMA) opened applications on Monday, November 9 for the industry group that will draft common standards for Europe's tokenized finance markets. The nomination window remains open through November 27, and the group's first draft of rules is not due until early 2028.

The joint call for nominations is the latest development in a year-long push to build a tokenization framework for the bloc throughout 2026.

Who can join the EU's tokenization standards group

According to ESMA's announcement, membership in the European Tokenisation Standards Group (ETSG) is open to trade associations, global institutions, private firms, fintechs and technical providers operating within the bloc. The regulators declared the application period open on November 9, and it will continue to receive submissions until November 27. Selected participants begin their work in January 2027.

Under the group's published mandate, ETSG members are tasked with reaching a consensus on the technical details and market standards for holding and settling tokenized securities across different distributed ledger technology (DLT) platforms, while maintaining compatibility with the financial systems already operating across the EU.

The group is also expected to build a monitoring system that allows EU authorities to track whether members actually use the standards, and it may recommend a framework designed to ensure broad adoption.

The ECB, the Commission and ESMA will hold only observer roles within the ETSG, with no voting power. All active positions — including the group chair — are reserved for the industry participants selected to join.

Why the EU is pushing shared tokenization standards

The three institutions leading the ETSG share the view that the bloc's tokenized market could split into smaller factions without deliberate coordination.

The EuroGroup warned in a July 2026 statement that "without shared standards, the multiplication of DLT networks risks recreating and compounding the fragmentation." The mandate advances the same argument: the silos that became a feature of the legacy system should be cleared before the bloc opens up to tokenization.

ECB Executive Board member Piero Cipollone laid out the scale of the fragmentation at a symposium in Frankfurt in August. He cited 31 central securities depositories, 14 central counterparties and 323 trading venues operating across Europe. He noted that more than 95% of securities transactions settled inside a single depository as of 2023, with only thin cross-border settlement — a structure he cautioned would only worsen if a new generation of incompatible platforms is layered on top of it.

The EU's 2026 tokenization push

The ETSG sits alongside a broader European effort. Asset interoperability and standards form the first of Appia's six building blocks. Appia is the Eurosystem's roadmap for an integrated tokenized financial market, published by the ECB in March 2026.

The Eurosystem launched Pontes in September 2026, as Cryptopolitan reported at the time. The system, announced by the ECB, links private DLT platforms to the ECB's settlement services so that the cash leg of a tokenized trade can settle in central bank money.

Cipollone has argued that access to central bank money is a condition for tokenized finance to scale safely, not an optional add-on. He has pointed to tokenized assets on public blockchains rising roughly fivefold between March 2025 and March 2026 as a sign that the market is moving from testing toward early use.

The ETSG's next goal is to publish an initial set of standards by early 2028, the same timeline the ECB set for its Appia blueprint. Cipollone has cautioned that technology alone will not get the project there: advanced systems, he said in August, cannot compensate for fragmented law, and he has called for clearer, harmonized legal rules to run alongside the technical work.

ESMA is pursuing part of that question separately. The regulator has a running call for evidence on whether tokenized collateral can survive a market crisis, with responses due by January 15, 2027, as Cryptopolitan previously reported.

Source: Cryptopolitan