The European Central Bank has agreed to accept certain distributed ledger technology (DLT) based securities as eligible collateral in Eurosystem credit operations from 30 March 2026, opening the door for tokenised assets to be used more directly within the euro area’s core monetary framework. The decision applies to marketable assets issued through central securities depositories using DLT-based services and signals a pragmatic shift toward accommodating digital market infrastructure without weakening existing safeguards.
Under the new framework, DLT-issued securities will be treated like any other eligible marketable asset, provided they meet established Eurosystem collateral eligibility and risk management criteria. This includes availability for settlement in eligible securities settlement systems that comply with the EU’s CSD Regulation and are connected to TARGET2-Securities. Collateral mobilisation and management will follow existing Eurosystem practices, rather than introducing bespoke rules for digital assets.
A cautious step toward tokenised finance
The move reflects the Eurosystem’s attempt to balance innovation with financial stability. By limiting eligibility to assets issued in regulated CSD environments, the ECB is drawing a clear line between tokenisation within existing market infrastructure and fully decentralised issuance models that remain outside the regulatory perimeter.
At the same time, the Governing Council made clear that this is not the endpoint. The Eurosystem has launched a broader work programme to explore whether, how, and under what conditions assets issued and settled entirely on DLT networks, without reliance on traditional securities settlement systems, could eventually become eligible as collateral. Any expansion would follow a staggered approach, with subsets of DLT-based assets gradually admitted as market practices, technology, and regulation evolve.
This forward-looking assessment will take into account developments in EU legislation, including potential changes to the CSD Regulation, the DLT Pilot Regime, the Markets in Crypto-Assets Regulation, and national securities laws across the euro area. The emphasis on legal clarity suggests the ECB remains wary of operational and legal risks associated with fully native DLT settlement.
Why collateral eligibility matters
Collateral eligibility is one of the most powerful levers in central banking. Assets that can be used in Eurosystem refinancing operations benefit from increased liquidity, lower funding costs, and greater attractiveness to banks and investors. By recognising DLT-based securities within its collateral framework, the ECB is effectively signalling that tokenisation can be compatible with core monetary operations, as long as it fits within Europe’s regulated financial architecture.
For issuers and market infrastructures, the decision could encourage further experimentation with DLT-based issuance models inside the CSD framework, rather than outside it. For policymakers, it provides a controlled environment to test how digital securities behave under stress, including valuation, settlement finality, and collateral management.
The ECB framed the decision as part of its broader commitment to innovation, efficiency, and a level playing field in European financial markets. In practice, it underlines a familiar Eurosystem approach: move incrementally, anchor innovation in existing institutions, and expand only once legal and operational risks are clearly understood.
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