DEEP LOOK | The race to tokenise markets is live, and the regulatory starting gun has fired on both sides of the Atlantic, but the real challenge remains ensuring the old world tracks the new one without disruption. Tokenisation has cracked collateral. The next question is when high-quality liquid assets follow, and which ecosystem carries the business when they do.

The global tokenisation race has begun, and the starter pistol is still smoking. Regulatory green lights on both sides of the Atlantic, a working prototype of a unified ledger for cross-border payments, and the first sovereign debt tokenisation pilots mean that infrastructure decisions taken now will define market structure for a decade. The question is no longer whether markets will tokenise — it is whether the traditional processes that underpin trust, safety and liquidity can keep pace, and whether the industry can avoid paying twice to find out.

This article tracks the outlook for these processes as regulatory clarity accelerates for a future that looks increasingly tokenised and asks two questions: can duality be managed and is the infrastructure being built heading toward the actual tipping point, or carefully around it.

Regulation (ready), set, go….

The joint Bank of England (BoE) and UK Financial Conduct Authority (FCA) 18 May 2026 paper signalling a green light for scaling tokenisation brings urgency to these questions. The regulators state the focus is on ensuring interoperability and consistent regulatory outcomes, so that post‑trade infrastructures can adopt new technology without fragmenting settlement processes or creating new risks.

BoE has committed to a live synchronisation service — atomic settlement of tokenised assets against central bank money — targeted for 2028. HM Treasury’s Digital Gilt Instrument (DIGIT) pilot is confirmed: gilts will be issued, traded and settled on DLT, with the explicit aim of catalysing UK-based DLT infrastructure. The BoE is also committing to enabling tokenised equivalents of already-eligible assets as collateral at CCPs and in its own operations.  

This is the most concrete commitment yet from any major jurisdiction that sovereign debt and central bank collateral infrastructure are entering the tokenised world on a defined timeline. A DLT-native gilt — the sterling market’s risk-free baseline — issued, traded and usable as CCP collateral could be the tipping point needed for tokenisation to scale. 

In the US, the Securities & Exchange Commission’s (SEC) December 2025 no-action letter authorised Depository Trust & Clearing Corporation to launch a tokenisation service within its custody framework. Limited production trades begin July 2026; full launch in October, built with more than 50 TradFi and DeFi firms, with recent connectivity to the Stellar blockchain. 

In Europe, the European Central Bank’s Pontes project — settling wholesale transactions on market DLT platforms against euro central bank money — launches September 2026, while Appia, its long-term blueprint, targets 2028. From 30 March 2026, the ECB began accepting DLT-based assets as Eurosystem-eligible collateral. And Bank for International Settlements’ Project Agorá, along with seven central banks and more than 40 institutions, delivered a prototype for atomic multi-currency cross-border settlement, now advancing to real-value testing.  

Two ecosystems, one budget

The banks writing the cheques have been unambiguous. Building a parallel operating model for digital assets — separate custody rails, reporting, workflows — is not viable. Wayne Hughes, head of Digital Assets, Securities Services at BNP Paribas, articulates where the industry is converging:

“One of our core design principles is to create a seamless, integrated operating model that spans both traditional and digital assets—essential to enable our clients to embrace digital assets without incurring the cost, complexity and operational disruption of building an entirely separate model.”

Hughes expects an extended transition: most assets issued traditionally over the next five years, with digital twins increasingly enabling 24/7 trading and enhanced collateral mobility for an initial set of use cases. The cash leg remains the most stubborn problem — the industry still lacks a widely adopted digital settlement payment mechanism, with stablecoins promising a near-term candidate and the BoE stablecoin regime, due later in 2026, the most consequential regulatory variable. 

A second challenge is fragmentation—not just between TradFi and DeFi, but within the DLT world itself: multiple blockchains, no common standards, isolated liquidity pools that do not interconnect. As Hughes puts it: “In the digital assets space, it can often feel like solving one challenge simply reveals two more.”

Collateral: where progress is real

Collateral mobility is where the duality problem is most acute, most quantifiable, and where genuine progress has been made. The largest banks operate across up to 65 different custody locations, according to research by Nasdaq and Value Exchange. Because a CCP can only accept collateral at designated points, much of it is effectively immobile at the moment it is needed most. The same research estimates that the largest banks forgo up to $340 million annually in lost interest income as a result.

Benjamin Landis, senior associate vice president at Eurex, presenting for Deutsche Börse Group at WFEClear 2026, framed the mission at the WFE Conference in Toronto: “Our vision is frictionless collateral, flowing as free and fast as information. This is not a pilot. This is a live service — fully functional, fully integrated, and used on a daily basis.”

The Eurex / HQLAX / Clearstream model frames the vision for collateral flowing as fast as information and shows how traditional and digital processes run in disciplined parallel. HQLAX on-ramps collateral onto a distributed ledger; ownership transfers happen on-ledger within minutes. But assets never leave their custody locations. Clearstream remains the central bookkeeper. Eurex is legally still accepting the underlying instrument — not a token — and no change was made to the collateral rulebook or risk management framework. From on-ramping to posting at Eurex takes 20 minutes, against T+2 in the old world. A clearing member can post some collateral traditionally and some via HQLAX simultaneously—the two processes coexist at the instrument level.

The BoE’s DIGIT pilot connects directly. A DLT-native UK gilt would be accepted by Eurex under existing rules — the framework is broadly technology-agnostic for existing instrument types. The BoE’s CCP collateral commitment makes this a near-term interoperability event rather than a future aspiration.

Can Europe move fast enough amid fragmentation?

Here the question shifts from whether tokenisation works to whether Europe’s fragmented infrastructure — multiple CCPs, multiple CSDs, multiple exchanges across multiple jurisdictions — can move coherently enough to avoid liquidity draining toward simpler, more concentrated systems elsewhere.

DTCC’s near-monopoly on US custody means the October 2026 AppChain launches with immediate access to the overwhelming majority of US-settled securities. Europe has no equivalent concentration point. Every interoperability solution requires negotiation across a complex web of national CSDs, international CSDs, CCPs and custodians, each with their own rulebooks, legal frameworks and technology stacks.

In Switzerland, the problem was tackled structurally. SIX operated two separate FMIs — its traditional CSD and SDX, the digital one — requiring separate onboarding and manual transfers between them. Marco Kessler, head of Product & Business Development Digital Assets at SIX, describes the solution: “Everybody talks about the bridge. Well, the integration itself is the bridge — not only for new assets being issued, but allowing the tokenisation of all the assets already in custody today. One plug to two worlds: a client can issue traditionally but distribute across different ledgers, accessing any investor, no matter the ledger.”

The legal merger of both CSDs  is complete; technical integration targets 2027. Kessler is explicit that scale only comes when existing assets — not just new issuances — can be mobilised across ledgers. SIX has already run a production pilot with one asset manager and 14 institutional clients including pension funds, testing tokenised portfolio customisation; intraday collateral lending, enabled by atomic transaction certainty, is the next use case in development.

Euroclear’s approach addresses the collateral mobility problem from the issuance side. Jan Grauls, product management, describes the core logic: “Issuers won’t issue on-ledger if there’s no secondary-market liquidity there. Investors won’t buy assets they can’t use. So we built a bridge.” The first Digitally Native Notes transitioned to secondary-market activity so smoothly that, as Grauls puts it, “the client didn’t even notice” — the securities were used in Euroclear’s triparty service without operational friction. Two DNNs have since been accepted as ECB-eligible collateral. 

The deeper European risk is standardisation. In PostTrade 360’s Bridging old and new worlds: The ECB’s Pontes priority, George Kalogeropoulos at the ECB identifies it plainly: there are no agreed communication protocols, no harmonised smart contract formats, no standard identification codes for DLT entities across Europe or globally. The ECB brings the convening power it deployed in T2S harmonisation. Pontes, from September 2026, is the first live test of whether that power can accelerate alignment across a genuinely fragmented market. 

Which ecosystem carries the business?

Collateral is moving in production today. The question the market cannot yet answer — and the one that determines where post-trade firms should place their bets — is when HQLA itself moves onto the new rails. The BIS has noted that tokenised bond issuance remains small and fragmented, with limited secondary market liquidity preventing broader adoption in issuer services. Senior figures in custody and securities services are direct: unless liquidity moves, the business stays where it is. The tokenisation of HQLA is the tipping point. As long as the most marginally risk-free assets operate on traditional rails, issuers remain in wait-and-see mode.

The BoE and HM Treasury have given the strongest signal yet that this changes. Six developments will show whether the signal is becoming substance:

  • DIGIT secondary market activity, not just issuance. Secondary market depth proves liquidity has moved. A pilot trade held to maturity confirms wait-and-see continues; genuine secondary market participation changes the ecosystem calculation.
  • BoE CCP collateral timeline. When the BoE’s commitment becomes a live service, the last regulatory friction in the clearing model for UK-eligible assets is removed. July 2026 consultation responses are the first indicator.
  • ECB Pontes uptake from September 2026. Volume and participant breadth in the first six months signals whether the market treats this as infrastructure or pilot.
  • DTCC AppChain depth from October 2026. Meaningful secondary market volume by Q1 2027 would mean US liquidity is concentrating in the tokenised environment ahead of Europe.
  • Stablecoin regulatory clarity. The BoE regime and FCA final rules, expected later in 2026, determine where the cash side of atomic settlement lives.
  • Project Agorá real-value testing. Scale of participation will signal whether atomic multi-currency cross-border settlement is moving toward production.

The tokenisation race has a winner condition: not the firm that goes fully digital fastest, but the one that makes the two worlds invisible to the user — and positions itself where the liquidity will be. The risk-free asset is now on the roadmap. George Kalogeropoulos, ECB, concludes: “For a major issuer bringing a systemically relevant asset issuance to a DLT platform, settling against the risk-free settlement asset of central bank money within the operational resilience of TARGET Services — I would argue that provides a major added value.”

What remains?

While the tipping point, when it comes, will not switch off the traditional post-trade stack, firms’ wallet allocation is a movable target. Firms allocating budget now are accounting for functions that will persist — and in some cases grow — precisely because two worlds will run in parallel for years. 

Reconciliation is one. Contrary to the intuition that a shared DLT ledger eliminates the need to check positions, it does the opposite: in a hybrid environment where assets move between tokenised and traditional rails, reconciliation becomes the critical control that validates integrity at the boundary between the two — a point Vinod Jain develops in “Why reconciliations are DLT’s unsung power tool”. 

Intraday liquidity management is another: atomic, real-time gross settlement consumes liquidity differently from the netted, batched world — the ECB has already flagged that scaling DLT settlement requires careful modelling of liquidity implications, and the operational discipline of intraday cash positioning will matter more, not less, as Olaf Ransome explores in “How much of this new stuff do we really need?”. 

Corporate actions, asset servicing and legal entity data — the most manual, most exception-prone processes in today’s back office — remain largely unsolved on-chain and will continue to demand investment. 

Traditional retains essential strengths — depth of liquidity, the funding benefits of netting, and risk visualisation at scale. The result is that firms will run atomic settlement, net settlement, pre-funding, market-based funding and batch processing simultaneously, not sequentially. Netting reduces gross funding requirements significantly; replacing it with atomic real-time gross settlement for every transaction removes that benefit, and for firms with large bilateral flows the pre-funding cost can outweigh the efficiency gains. Intraday liquidity management sits at the centre of this: as the mix of atomic and netted settlement grows more complex, knowing precisely where cash is at any point in the day — and what it costs to move it — becomes more demanding, not less.

 The strategic choices firms make now — which infrastructure to connect to, which settlement models to support — will determine whether they end up optimising across both, or stranded in one.

The question for every post-trade firm is not “what can we stop paying for?” It is “which of these functions will still be load-bearing at the tipping point — and are we building toward that, or away from it?”