European authorities have opened nominations for an industry group tasked with developing common standards for holding and settling tokenized securities, seeking to prevent blockchain-based financial markets from becoming a patchwork of disconnected platforms.
The European Central Bank (ECB), European Commission and European Securities and Markets Authority (ESMA) announced the European Tokenisation Standards Group (ETSG) on November 9.
Industry Will Lead Work on a Common Rulebook
The ETSG will bring together financial institutions, industry associations, fintech companies and technology providers to agree on standards for an interconnected European tokenized financial ecosystem.
Industry representatives will chair the group, while the ECB, Commission and ESMA participate as observers. Its work will rely on contributions and agreement among market participants.
Applicants must represent an entity with a European presence and demonstrate relevant expertise in financial standards or their practical application. They must also commit sufficient resources and be able to involve their organizations in implementing the group’s findings.
The group will develop a framework to monitor compliance with agreed standards and may recommend measures that European authorities could use to encourage adoption.
However, the announcement does not introduce an immediately binding settlement regime. It starts a process for agreeing on industry standards, alongside legislative proposals that remain subject to approval.
Initial standards relevant to the Eurosystem’s Appia roadmap are targeted for early 2028.
Interoperability Takes Priority Over Isolated Platforms
Tokenization involves issuing or representing financial assets as digital tokens, typically on distributed ledgers. The technology can connect issuance, trading, settlement and servicing, while smart contracts automate processes that currently require separate steps.
But those benefits depend on platforms working together. Incompatible networks could divide assets and liquidity into separate pools, reproducing fragmentation already present in Europe’s capital markets.
The ETSG’s remit covers interoperability between DLT infrastructures and between those systems and legacy infrastructure. Its standards will address both settlement and the holding of financial instruments.
Members will first examine existing European and international standardization initiatives, identify gaps and determine where additional agreements are necessary. The mandate explicitly favors building on established standards where appropriate, reducing duplication.
The initiative also connects with the Commission’s December 2025 Market Integration and Supervision Package. Proposed amendments to the DLT Pilot Regime envisage industry standards that facilitate settlement between DLT market infrastructures.
Authorities want the group to begin work before those amendments take effect, without prejudging the legislation’s final requirements.
Pontes and Appia Provide the Wider Settlement Framework
The standards effort builds on operational developments in Europe’s tokenized markets.
On Sept. 21, the Eurosystem launched Pontes, which connects market DLT platforms with TARGET Services so wholesale transactions in tokenized assets can settle in central bank money.
The ECB says Pontes will expand gradually, with enhanced functionality and longer operating hours planned as implementation progresses toward 2028.
Appia addresses the broader architecture, governance and standards of a European tokenized financial ecosystem, with a blueprint also due in 2028.
Market feedback has reinforced the need for coordination. An Appia consultation attracted 127 public and private respondents, with standardization emerging as a priority for avoiding fragmentation and linking new infrastructure with existing systems. The ECB said architectural choices remain under examination.
For financial firms, the next milestone is participation in shaping those arrangements. The ETSG’s practical test will be whether competing providers can agree on standards and implement them widely enough to make cross-platform settlement workable.
