Europe’s markets regulator wants proof that a tokenized government bond can be sold fast enough to cover a defaulting clearing member. The European Securities and Markets Authority (ESMA) req
Europe’s markets regulator wants proof that a tokenized government bond can be sold fast enough to cover a defaulting clearing member.
The European Securities and Markets Authority (ESMA) requested for the evidence today, ten months after Washington began letting futures brokers post crypto assets as margin.
The European Securities and Markets Authority (ESMA) wants to know if tokenized versions of assets that are already approved can be trusted when markets are under stress.
The review covers tokenized assets issued directly onto distributed ledgers and those that copy holdings that are already kept in traditional systems, called “digital twins.”
ESMA’s question is directed at central counterparties (CCPs), which are clearinghouses that sit between buyers and sellers. They also absorb the hit if a trading member collapses. Responses to ESMA’s questions are due by 15 January 2027.
Klaus Löber, who chairs ESMA’s CCP Supervisory Committee, said collateral must be good quality, legally enforceable and easy to sell. He added that it must also be easy to access in practice, even in a crisis or after a clearing member defaults.
Some companies in the industry, like Eurex Clearing, are already making moves. The Deutsche Börse clearinghouse launched a DLT-based collateral service in July 2025, describing the service as the first of its kind from a CCP. JPMorgan carried out the first live deal for PGGM, the Dutch pension investor, moving securities in from a separate custody location.
In September, the Eurosystem launched Pontes, a system that lets institutions settle tokenized asset trades in central bank money. ESMA said Pontes could support tokenized collateral by connecting blockchain systems with the settlement systems already in use.
ESMA Chair Verena Ross said the review is part of a bigger effort to create “the conditions for tokenised markets to operate safely and at scale.” She added that it should give these markets clear legal rules, systems that work well together, and proper oversight.
ESMA has said it will review the responses from the CCPs in the first quarter of 2027 before deciding whether any rule changes are warranted.
In December 2025, the CFTC’s Market Participants Division and Division of Clearing and Risk issued Staff Letter 25-39 on tokenized collateral, plus the letter now reissued as Staff Letter 26-05, a no-action stance allowing futures commission merchants to take payment stablecoins, bitcoin and ether as margin.
Those letters came out of the agency’s “Crypto Sprint,” which included a pilot for using bitcoin, ether and payment stablecoins as derivatives collateral.
Derivatives clearing organizations can take crypto, stablecoins included, as initial margin when it clears a “minimal credit, market, and liquidity risk” bar, provided haircuts get a monthly review.
Brokers must hold at least 20% against their own bitcoin and ether positions and 2% against payment stablecoins, matching the SEC’s broker-dealer guidance.
Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.
