Tokenized deposits and stablecoins require tokenized central bank money as a public settlement anchor for Europe’s tokenized financial markets to scale, European Central Bank Executive Board member Piero Cipollone said on Monday.
Cipollone highlighted Pontes, the Eurosystem’s distributed ledger technology (DLT) settlement initiative, which aims to link market DLT platforms with the Eurosystem’s TARGET services and enable settlement in central bank money. He warned that without tokenized central bank money, sellers of tokenized securities might be paid in assets they are unwilling to hold—assets exposed to price volatility or credit risk—hindering market growth.
The ECB expects an initial Pontes launch in the third quarter of 2026, allowing market participants to settle DLT-based transactions in central bank money. Pontes is part of the broader Appia initiative, published March 11, which seeks to produce a blueprint for a European tokenized financial ecosystem by 2028.
Beyond central bank settlement, Cipollone said Europe needs stronger public-private cooperation and a legal framework aligned with the technology. One Appia component proposes an interoperability standard for assets so tokenized instruments can move across different DLT platforms using compatible data formats and smart contract standards.
Cipollone urged market infrastructure operators, banks, custodians and technology providers to review and submit feedback on the Appia roadmap as part of efforts to foster public-private partnerships. He also suggested Europe may ultimately require a dedicated legal framework to support the seamless issuance and transfer of tokenized assets across the bloc.
While calling the European Commission’s proposal to extend the DLT Pilot Regime an “important development,” Cipollone cautioned that lacking a comprehensive tokenization framework risks building advanced settlement infrastructure on a patchwork of regulations, limiting potential benefits.
The remarks follow stablecoin issuer Circle’s submission of feedback to the European Commission’s Market Integration Package on March 20, where Circle urged expansion of the DLT Pilot Regime and the provision of e-money token (EMT) cash account services to authorized crypto-asset service providers.
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