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ESMA has not found that tokenised collateral can—or cannot—be turned into cash quickly during a clearing crisis. On 9 October 2026, the European Securities and Markets Authority opened a call for evidence asking whether EU central counterparties (CCPs) can use tokenised collateral safely and effectively, including after a clearing member defaults. Responses are due 15 January 2027; ESMA says it will assess them in Q1 2027 before deciding whether further action within its remit is appropriate.
What ESMA is asking—and what it is not deciding
The central question is practical: after a clearing member defaults, can a CCP access the collateral that member posted, transfer or otherwise process it, and convert it into usable funds in the time needed to manage the default?
The call examines how tokenisation may affect the existing collateral lifecycle: mobilisation, transfer, management, protection and realisation. ESMA is not reassessing or expanding the categories of collateral eligible for CCP use. Its aim is to establish whether existing requirements and supervision can accommodate tokenised arrangements safely.
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Two models, with different routes from token to value
ESMA describes two broad implementation models and recognises that arrangements may combine them. The key difference is not simply “blockchain versus traditional infrastructure”; it is where the legally authoritative record sits and what steps stand between the CCP and usable funds.
| Model | Where the asset and record sit | Questions for crisis realisation |
|---|---|---|
| Digital twin | A token represents or facilitates use of an asset that remains held and recorded in conventional custody, settlement or central securities depository (CSD) infrastructure. | How does the token record reconcile with the underlying “golden record”? If the records conflict, which prevails? Does the token help the CCP identify or allocate collateral while sale, repo or transfer still depends on a custodian or CSD? |
| Natively issued asset | Issuance, holding, transfer and collateral operations take place directly in a distributed ledger technology (DLT) environment. | Can the ledger, connected payment and settlement assets, available liquidity, and any outside infrastructure or intermediaries deliver value in the currency and timeframe the CCP needs? |
| Hybrid arrangement | Combines features of the two models and may interact with tokenised cash or other settlement assets. | Are the interfaces, records, rights and dependencies across the components clear and workable under stress? |
A token could make identification, allocation or pre-positioning more efficient without removing the steps required to realise the underlying asset. A native arrangement may use ledger operations more directly, but still depends on liquidity, settlement mechanisms and potentially other providers. ESMA wants these dependencies assessed in normal conditions and under stress.
Why a clearing-member default is the test that matters
CCPs collect collateral to cover current and potential future losses if a clearing member defaults. In that event, an asset moving from “posted” to useful for default management may require more than a transfer on a ledger: depending on the arrangement, it may need to be transferred, transformed, sold, financed through repo, or otherwise realised.
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The relevant measure is therefore not whether a token can move quickly in ordinary operation. It is whether a specific arrangement can legally and operationally deliver value, in the required currency and within the necessary timeframe, when a default puts the process under pressure. That assessment should account for the actual platform, custody, redemption and settlement path—not assume that the token layer alone creates liquidity.
The call does not establish that conventional assets retain their liquidity unchanged when tokenised, or that DLT necessarily reduces liquidity. It asks for evidence about the particular arrangements and their performance in both normal and stressed conditions.
Legal rights, records and transfer finality
ESMA asks whether the rights represented by a token are enforceable under applicable law, including across national borders and in insolvency. A token’s qualification as a financial instrument does not, on its own, resolve whether a DLT record creates or transfers property rights.
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- Authoritative records: For a digital twin, the token record and the underlying asset record need a clear reconciliation process and a defined rule for which record prevails if they differ.
- Segregation: The separation of client collateral must be legally effective as well as technically implemented.
- Portability: The arrangement must address whether client positions and collateral can be moved after a clearing member defaults.
- Finality: The legal point at which a transfer becomes final and irrevocable should be clear, particularly if the CCP counts the asset as posted at that point.
These questions affect whether the CCP can rely on a token in a default, rather than merely observe that it appears in a ledger.
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Liquidity, cash and possible safeguards
Tokenised securities
For tokenised securities, ESMA asks whether tokenisation changes the time, process, certainty, market liquidity or security of selling or repoing the asset. A bond that is conventionally liquid could still encounter token-specific friction if it needs a redemption step, transfers are restricted to a particular platform or settlement asset, or connections to the broader financial system are weak. Depending on the evidence, those factors could warrant changes to eligibility, haircuts or other safeguards.
Cash-like tokens and settlement assets
The question for a cash-like token is whether it can legally discharge the relevant obligation and whether the CCP can reliably access the currency it needs. ESMA identifies tokenised central-bank money, stablecoins, e-money tokens and tokenised deposits as possible settlement assets, but they are not necessarily treated as equivalent to cash under regulatory or supervisory frameworks. Stablecoins may also deviate from par. Relevant considerations include redemption rights, issuer credit, conversion arrangements and infrastructure robustness.
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System-wide liquidity effects
Faster settlement, automation, programmability and continuous processing might improve efficiency, but could also shorten the time participants have to source collateral and increase intraday liquidity needs. If similar automated triggers prompt many participants to call for or transfer assets at once, they could synchronise demand during stress and amplify pressure on shared liquidity sources. ESMA presents these as issues to examine; the call does not quantify such effects.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Operational resilience means more than ledger uptime
ESMA frames resilience across the functions a CCP needs to keep operating: margin collection, collateral management, payments and default management. A ledger that remains online is not enough if an external provider, settlement asset or connected infrastructure fails and prevents the CCP from accessing or realising collateral.
The evidence request covers governance, information and communications technology (ICT) and cyber risks, external-provider dependencies, recovery and fallback arrangements, testing, and scenario analysis. It also asks which components should count as critical dependencies and what assurance and extreme-but-plausible scenario testing should be required before CCPs rely more broadly on tokenised arrangements.
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What evidence could answer the cash-out question?
For a meaningful assessment, evidence needs to connect the token to the complete default-management path, not stop at token issuance or transfer. The questions raised by ESMA point to a practical set of checks:
- Identify the asset, the legally authoritative record, and the rights the CCP receives when collateral is posted.
- Map every step from default to usable funds, including transfer, custody, sale or repo, redemption, currency conversion and settlement, as applicable.
- Establish how long each step takes, how predictable it is, and what happens if a platform, intermediary or settlement asset is unavailable.
- Show that client segregation, portability and transfer finality hold under the relevant insolvency and cross-border conditions.
- Test the arrangement under stressed liquidity, cyber disruption, provider failure and other extreme-but-plausible scenarios, including recovery and fallback procedures.
- Consider whether automation could concentrate collateral calls or increase intraday funding needs when market participants are under the same stress.
No measured cash-conversion times, crisis success rates, liquidity outcomes or haircut effects are reported in the call. ESMA’s questions should not be read as proof either that tokenised collateral has passed a crisis test or that it has failed one.
ESMA’s next steps and the scope of its experience
Stakeholders can respond online by 15 January 2027. ESMA says it will assess the feedback in Q1 2027 and then decide on a course of action, which could include regulatory or supervisory convergence action within its remit. Responses are expected to be published after the call closes unless a respondent asks otherwise.
ESMA Chair Verena Ross said tokenisation has the potential to make European financial markets more efficient, integrated and innovative, while stressing the need for safe operation at scale across borders, legal certainty, interoperable infrastructure and appropriate supervision. Klaus Löber, Chair of ESMA’s CCP Supervisory Committee, described the operational standard collateral must meet: “Collateral must be of high quality, legally enforceable, highly liquid, and easily operationally available, including in stressed conditions and following a clearing member default.”
ESMA also said that, by finalising the call and based on work through EMIR CCP supervisory colleges, HQLAᵡ was the only project in central clearing it had seen. This is a statement about ESMA’s experience in that specific context, not a claim that it was the only tokenisation project across financial markets.
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