The Bank of England opened a consultation on 29 October on how central counterparties should assess tokenised collateral. Responses are due by 12 February 2027, with clearing participants, infrastructure providers and technology firms among the groups invited to contribute.[1]
The Bank sees potential for faster collateral mobilisation, including across borders, to help firms meet margin calls. Its position is that the existing framework can accommodate tokenised forms of eligible assets, provided they remain capable of being valued, transferred and realised when needed, including during market stress.[1]
ESMA opened a separate EU call for evidence on 9 October, with responses due on 15 January 2027 and an assessment planned in the first quarter. That exercise seeks information to determine its next action. The UK consultation now puts a draft supervisory statement before industry.[1][3]
Liquidation is the central test
The paper distinguishes a token linked to a conventional asset from one issued natively in digital form. The first may need conversion before sale; the second may lack a conventional market. A token’s continued trading outside the underlying market’s hours does not establish equivalent liquidity.[2]
The draft also examines legal ownership, settlement finality and operational control. A third-party bridge, lost cryptographic key or failed ledger can interrupt access to collateral even where the underlying asset retains value. Clearing houses would need to explain their recovery arrangements.[2]
Acceptance remains conditional
Tokenising an already accepted asset can still require a fresh regulatory assessment when delivery, credit or liquidity risks differ. Stablecoin eligibility would require a rule change or permission to waive or modify a rule, alongside other relevant approvals.[2]
The paper is framed around the proposed CCP Rulebook. Replacement of the relevant UK EMIR derivatives requirements still depends on Treasury repeal.[2]
Sources & further reading
- Bank of England sets out approach to tokenised collateral in central clearing Bank of England · 29 Oct 2026 · Accessed 30 Oct 2026
- Consultation on supervisory expectations for central counterparties seeking to accept tokenised collateral Bank of England · 29 Oct 2026 · Accessed 30 Oct 2026
- ESMA seeks evidence on the use of tokenised collateral in central clearing European Securities and Markets Authority · 9 Oct 2026 · Accessed 30 Oct 2026