ECB says stablecoins, tokenized deposits need central bank money to scale

Tokenized deposits and stablecoins need tokenized central bank money as a public settlement anchor if Europe’s tokenized financial markets are to scale, Piero Cipollone, a member of the European Central Bank’s Executive Board, said on Monday.

Cipollone pointed to Pontes, the Eurosystem’s distributed ledger technology (DLT) settlement initiative, which is designed to connect market DLT platforms with the Eurosystem’s TARGET Services and provide settlement in central bank money.

“Without tokenised central bank money, a seller of a tokenised security may receive payment in an asset they are not comfortable holding – one exposed to price volatility or credit risk – which limits the market’s ability to scale,” Cipollone said in a speech at the House of the Euro in Brussels on Monday.

The ECB said Pontes is due for an initial launch in the third quarter of 2026, allowing market participants to settle DLT-based transactions in central bank money. The comments build on the ECB’s broader Appia initiative, published on March 11, which is intended to produce a blueprint for a future European tokenized financial ecosystem by 2028.

Europe’s tokenized markets need legal clarity

Beyond settlement in central bank money, Cipollone said Europe also needs closer public-private cooperation and a legal framework that matches the technology.

One of Appia’s building blocks serves as an interoperability standard for assets, ensuring that tokenized assets can be transferred across different DLT platforms via a compatible data format and smart contract standards.

Cipollone urged market infrastructure operators, banks, custodians and technology providers to explore and submit feedback related to the Appia roadmap, seeking to foster more public-private partnerships.

Cipollone also said Europe may ultimately need a dedicated legal framework to support the seamless issuance and transfer of tokenized assets across the bloc.

He called the European Commission’s proposal to extend the DLT Pilot Regime an “important development,” but cautioned that the absence of a holistic tokenization framework introduces the risk of “building advanced settlement infrastructure on a patchwork of regulations, leaving us unable to fully reap the benefits.”

The comments come days after stablecoin issuer Circle submitted feedback to the European Commission’s Market Integration Package on March 20, urging lawmakers to expand the existing DLT Pilot Regime and provide e-money token (EMT) cash account services to authorized crypto-asset service providers.