ESMA seeks evidence tokenized collateral can be cashed out in crisis

ESMA is seeking industry feedback on the legal, liquidity and operational risks of tokenized collateral before deciding whether additional EU regulatory measures are necessary.

The European Securities and Markets Authority (ESMA) wants evidence that clearinghouses can access tokenized collateral and turn it into cash if markets come under stress.

ESMA published a call for evidence Friday to seek industry feedback on the implications of tokenized collateral.

“We must create the conditions for tokenized markets to operate safely and at scale across borders, with legal certainty, interoperable infrastructures and appropriate supervision,” ESMA Chair Verena Ross said.

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