Tokenized collateral brings custody and settlement closer together

Tokenized collateral has moved further into mainstream financing as Eurex Clearing has outlined plans to accept digital securities and Societe Generale has completed a $10 million Treasury transaction, bringing new demands on how custodians protect assets until settlement.

Summary

• Eurex plans to bring native digital securities into its existing clearing and margin framework.
• Societe Generale accepted $10 million in tokenized US Treasuries as collateral on Canton.
• Zodia Custody CEO Richard Clark says assets should remain segregated until settlement.
• UK and EU authorities are examining collateral safeguards, legal ownership and access during defaults.

Richard Clark, CEO of Zodia Custody, told crypto.news that institutions adopting tokenized collateral need custody and settlement infrastructure that can work together as assets move around the clock.

His comments follow announcements from clearing houses, banks and regulators addressing how blockchain-based securities can enter established financing arrangements without weakening the controls applied to conventional assets.

"Tokenising an asset does nothing to lower the standard it has to meet, which is why the clearing houses and banks moving first are bringing tokenised collateral under the rulebooks and risk models they already apply," Clark said.

Tokenized collateral enters existing clearing arrangements

In its Nov. 2 announcement, Eurex Clearing described plans to combine traditional and native digital instruments within one clearing framework, rulebook and risk model.

The arrangement would allow digital securities, including issuances by the European Stability Mechanism, to trade in Eurex Repo's GC Pooling segment, clear through Eurex Clearing and qualify as margin collateral.

Eurex said participants would access the digital instruments through their existing clearing relationships and infrastructure. The securities would become eligible for the ECB GC Pooling basket, connecting them with the group's established repo market.

According to the clearing house, its approach is intended to preserve existing liquidity pools and avoid splitting activity between separate traditional and digital markets.

Clark's comments address the custody arrangements supporting such activity: institutions need to put collateral to work while maintaining the protections attached to assets held on clients' behalf.

Custody protection needs to last until settlement

"Collateral only earns its keep when it can move in real time while staying segregated until the point of settlement, and an institution that has to release it from custody early to put it to work takes on the very risk custody was there to remove," Clark said.

Zodia operates in this market through Interchange, its institutional settlement network. The company describes the service as allowing clients to trade, borrow, lend and deploy digital assets across venues while keeping them in custody until settlement.

Its product materials list segregated wallets, automated net settlement and support for transactions involving multiple parties, including collateral management arrangements.

Clark argued that continuous asset movement changes how institutions must connect functions historically managed as separate stages.

"Traditional markets could run custody, settlement and collateral management as separate steps because assets settled on a fixed timetable, but once collateral moves around the clock those steps stop being separate at all, so custody and settlement infrastructure have to be built to work as one."

His assessment comes from a custody provider whose services include the settlement and collateral workflows he described.

Societe Generale brings US Treasuries into collateral workflows

Societe Generale's Prime Services and Clearing division accepted $10 million in tokenized US Treasuries on Canton, according to the bank's Nov. 2 statement.

The transaction used assets created through the soft launch of the Depository Trust & Clearing Corporation's Tokenisation Service.

According to the bank, the Treasury representations moved onchain and were recorded within its existing back-office and collateral systems, operating under its governance, risk and control framework.

The announcement follows Societe Generale's first US tokenized bond issuance on Canton in November 2025 and its appointment as a network Super Validator in May 2026.

Salim Nemouchi, the bank's global head of Prime Services, described the transaction as connecting tokenized securities with financing markets where clients could use them.

Regulators examine access and ownership during defaults

The Bank of England's consultation addresses tokenized versions of collateral already eligible under its proposed CCP Rulebook, without creating a separate regulatory regime.

Its draft expectations cover liquidity, valuation, settlement finality, operational resilience and safeguarding. The document distinguishes contractual settlement finality from legal protection against a transfer being unwound following insolvency.

In the EU, ESMA's collateral review examines whether clearing houses can access, transfer, and turn tokenized assets into liquidity when a clearing member defaults.

ESMA is accepting responses until Jan. 15, 2027, and plans to assess the evidence during the first quarter.