ESMA Considers Tokenized Assets Amid Crisis

The European Securities and Markets Authority (ESMA) has initiated a review of tokenized collateral used by European clearing institutions to assess its liquidity and operational risks. The authority has issued an open call for discussion, requesting financial institutions to provide evidence of the availability of tokenized assets and their convertibility into cash during a financial crisis. On October 9, ESMA asked banks, clearing houses, custodians, and technology providers to submit their feedback by January 15, 2027. The regulator is examining how tokenized assets can be transferred, protected, and sold in the event a clearing house member fails to meet its financial obligations. It will evaluate the data received in the first quarter of 2027 before deciding if additional regulations are necessary.

According to ESMA Chair Verena Ross, conditions must be created for the safe operation of tokenized markets across borders—with legal certainty and appropriate infrastructure. Tokenized asset collateral is already being used in European clearing institutions: in July 2025, Eurex Clearing implemented a distributed ledger technology-based collateral service, and JPMorgan completed the first live transaction for Dutch pension investor PGGM, moving securities from another custodian.

ESMA is also examining whether financial institutions face delays when attempting to sell tokenized securities or convert tokenized cash into regular money. Potential restrictions on transfers, redemption procedures, and reliance on third-party service providers are being discussed. Even assets that are easily traded on traditional markets may encounter additional difficulties if their tokenized form cannot be transferred or redeemed in a timely manner.

Chair of the ESMA Clearing Supervisory Committee Klaus Löber emphasized that collateral must be of high quality, legally binding, highly liquid, and easily accessible operationally—even under stress conditions and following a clearing house member's default. ESMA is not proposing changes to the categories of assets that can be used as collateral. The consultation aims to assess whether current rules adequately address new methods of holding and transferring tokenized assets. It also considers whether the transfer of a token conveys legal ownership or rights to the underlying financial asset.