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BTC 
ETH European market regulators require proof of the ability of tokenized government bonds to liquidate quickly
The European Securities and Markets Authority (ESMA) today issued a request in the hope of obtaining evidence that tokenized government bonds can be sold quickly enough to cover losses in the event of a liquidation member default. The request came after Washington, D.C., began allowing futures brokers to use crypto assets as margin ten months ago.
What evidence does ESMA need?
The European Securities and Markets Authority (ESMA) aims to understand whether tokenized versions of assets that have already been approved are trustworthy when markets are under pressure. The review covers two types of assets: tokenized assets issued directly on distributed ledgers; and "digital twins" assets that replicate existing positions in traditional systems.
ESMA's problems mainly point to the central counterparty (CCP), a clearing house that is located between buyers and sellers and bears risks. When trading members collapse, these institutions need to absorb the shock. ESMA requires all parties to submit responses by January 15, 2027.
Klaus Löber, chairman of ESMA's Central Counterparty Supervision Committee, said collateral must be of high quality, legally enforceable and easy to sell. He emphasized that even during crises or after a liquidation member defaults, collateral must be easy to obtain and use in practice.
Initiatives of industry pioneers
Some companies in the industry, such as Eurex Clearing, have already taken action. Deutsche Börse Clearing House launched a collateral service based on distributed ledger technology (DLT) in July 2025, calling it the first of its kind launched by the clearing house. JPMorgan Chase completed the first real-time transaction for Dutch pension investor PGGM, moving securities from an independent custody location into the clearing system.
In addition, the euro zone central bank system launched the Pontes system in September, allowing institutions to use central bank currency to settle tokenized asset transactions. ESMA said Pontes can support the application of tokenized collateral by connecting the blockchain system with existing settlement systems.
Build a secure and scalable market environment
ESMA Chairman Verena Ross said the review is part of a larger effort to create "conditions" for safe and large-scale operations in the tokenized market. She added that this would provide these markets with clear legal rules, well-coordinated systems and appropriate regulatory oversight.
ESMA said it will review responses from central counterparties in the first quarter of 2027 before deciding whether any rule changes are necessary.
CFTC regulations on tokenized collateral
In December 2025, the Market Participants Division and Clearing and Risk Division of the U.S. Commodity Futures Trading Commission (CFTC) issued "Employee Letters 25-39" covering the issue of tokenized collateral. The letter was subsequently reissued, numbered "Employee Letter 26-05", adopting a no-action stance and allowing futures commission brokers to accept payment stablecoins, Bitcoin and Ethereum as margins.
These letters stem from the agency's "Cryptocurrency Sprint" program, which includes a pilot project to test the use of Bitcoin, Ethereum and payment stablecoins as collateral for derivatives.
Derivatives clearing organizations can collect crypto assets (including stablecoins) as initial margin during the clearing process, provided that the "minimum credit, market and liquidity risk" criteria are met and the discount rate is reviewed monthly.
Brokers are required to hold at least 20% margin on their own Bitcoin and Ethereum positions, and at least 2% margin on payment-based stablecoin positions, in line with SEC guidelines for broker-dealers.
