ESMA Reviews Tokenized Collateral for Clearinghouses Amid Market Stress
- The European Securities and Markets Authority (ESMA) published a call for evidence to assess the viability of tokenized collateral in clearing operations.
- ESMA Chair Verena Ross emphasized the need for legal certainty and interoperable infrastructures for tokenized markets.
- Eurex Clearing launched a distributed ledger technology-based collateral service in July, marking a significant step in integrating tokenized assets into traditional finance.
- The consultation will explore risks associated with liquidity and ownership of tokenized assets, particularly during market stress scenarios.
- Recent developments include the Eurosystem’s launch of Pontes, facilitating settlements of tokenized transactions using central bank money.
This review aims to ensure that existing EU regulations can effectively manage the risks associated with stablecoins and other forms of tokenization within clearinghouses, especially when market conditions deteriorate.
The ongoing consultation is crucial as it addresses how clearinghouses can liquidate tokenized collateral efficiently, reflecting on Eurex Clearing’s recent advancements in this area. (Source)
