Tokenized Assets Face Their Real Test: A Margin Call

The Bank of England launched a consultation on October 29 on allowing clearinghouses to accept tokenized eligible collateral, with responses due by February 12, 2027. The Bank said current rules do not necessarily prevent tokenized collateral if the asset can be priced, moved and sold for cash under stress. The proposal is not a general authorization: each central counterparty, which sits between trade sides and absorbs default risk, would decide what it accepts. The consultation asks for views on possible future assets including stablecoins and tokenized money-market funds. LCH Ltd still requires variation margin, the daily settlement of a position’s value change, to be paid in cash in the underlying exposure’s currency.