Collateral goes on-chain

This article is part of In conversation about sustainable finance & emission reduction systems, a new series by Diego Balverde. You're reading volume 17 of the Collateral Crisis series. Here is volume 16

Prologue

For centuries, financial systems separated three elements that economically belonged to the same transaction: the asset, the information proving ownership of that asset and the money used to settle its transfer. Bonds, equities, loans and collateral could change hands, but behind every movement stood a chain of records, custodians, clearing systems, securities depositories, reconciliations and messages exchanged among institutions.

Tokenisation and distributed ledger technology are beginning to challenge that architecture. Since 30 March 2026, the Eurosystem has accepted certain marketable assets issued through DLT-based services within eligible central securities depositories as collateral for its credit operations, provided that they satisfy the same broader eligibility requirements and can be settled through recognised Eurosystem infrastructure.

This does not mean that any token has become eligible ECB collateral. It means something much more significant: a financial asset can use DLT infrastructure and still enter the institutional core of the monetary system.

In parallel, Pontes is scheduled for September 2026 as a bridge connecting market DLT platforms with TARGET Services so wholesale transactions can settle in central bank money, while Appia is developing Europe's longer-term tokenised financial architecture, with a comprehensive blueprint expected in 2028. Europe has moved beyond debating whether finance can be tokenised and has begun constructing the infrastructure through which part of finance can actually operate that way.

The asset, the money and the collateral are beginning to speak the same digital language

The importance of this change does not lie merely in replacing one type of database with another. The deeper potential appears when issuance, ownership records, trading, settlement, servicing and selected contractual functions can be connected within programmable infrastructure.

Much of today's financial architecture relies on systems sending information to one another and subsequently reconciling what happened. Tokenisation can reduce part of that fragmentation because the digital representation of an asset can be transferred and updated through shared infrastructures, while smart contracts can automate defined processes.

The BIS notes that DLT can combine data, execution and transfer in programmable workflows, reduce reconciliation requirements and enable atomic settlement, where all legs of a transaction execute together or none executes at all. Project Agorá demonstrated in May 2026 that this principle can be applied to wholesale cross-border payments using tokenised central bank reserves and tokenised commercial bank deposits, and the project is moving toward real-value testing. The transformation therefore no longer belongs primarily to crypto markets. It is entering the architecture of central banks, commercial banks and wholesale financial markets.

For collateral markets, the implications may be even more profound. Today's system must identify an asset, establish eligibility, mobilise it, confirm ownership, apply a haircut, transfer or block it, update multiple records and later release or substitute it. Every step contains time, infrastructure and operational risk.

A more tokenised architecture can bring some of those functions closer together and automate portions of the process, potentially enabling eligible collateral to move more rapidly and allowing transactions to settle against central bank money without relying on such long sequential processing chains. Pontes matters precisely because it preserves the element that gives the architecture credibility: it does not seek to replace central bank money with a private promise but to connect new DLT platforms with TARGET Services so that settlement can continue using the safest monetary asset in the system. Appia looks further ahead by exploring whether Europe should eventually rely on a shared ledger, several interoperable ledgers or another architecture capable of supporting issuance, trading and settlement without digitally reproducing the fragmentation already embedded in conventional markets.

The great transformation will not be tokenising the bond but connecting it to what supports the bond

The first generation of financial tokenisation is understandably concentrated on digitally representing instruments that already exist. That is meaningful progress, but it is not yet the full transformation. A tokenised bond that still depends on fragmented operational information remains fundamentally the same economic risk travelling through better infrastructure.

The deeper evolution begins when the financial representation can connect with verifiable information about the asset, project or company generating the cash flows behind the instrument. A BESS facility financed with debt can produce continuous information about available capacity, cycles, degradation, round-trip efficiency, revenue, availability and maintenance; a port can generate information about throughput, waiting time, crane utilisation, energy consumption and storage; an industrial plant can measure production per MWh, downtime, scrap and unit cost; a water network can report physical losses and recovery; a data centre can demonstrate contracted power, utilisation, cooling performance, availability and connected capacity.

Tokenisation alone certifies none of these variables, but it creates an architecture in which the financial identity of the asset can become far more closely connected with its operational reality.

This is where DOIX can become relevant. The platform does not need to become a blockchain merely because blockchain exists, nor should every piece of operating information be written to a public ledger. The economic value lies in creating a verifiable data layer capable of connecting, where regulation and economics justify it, with digital financial instruments.

DOIX can maintain the baseline, capture evidence from operating systems, validate relevant changes and create a sufficiently structured performance history for banks, funds, insurers and investors to understand what is occurring inside the asset. If an obligation, loan, participation or economic right is subsequently represented through tokenised infrastructure, financial information and operating information can increasingly travel together. The consequence could be substantial: investors would no longer purchase only an instrument described by an identifier, maturity, coupon and rating but could also gain access to evidence explaining how the underlying source of yield is evolving.

From collateral management to collateral intelligence

Tokenisation can make collateral more mobile, but more mobile collateral is not automatically better collateral. If financial systems simply become capable of moving poorly understood assets faster, they can also transmit problems faster.

The real advance requires combining mobility with intelligence. Banks should increasingly be capable of knowing not only where collateral sits and what its current valuation is but which economic vulnerabilities are growing or declining underneath it. In modern industrial infrastructure, those signals can appear far earlier than they do in periodic financial statements.

A persistent increase in energy consumption, declining availability, degradation above contractual curves, falling throughput or rising maintenance requirements can reveal deterioration before a financial covenant is breached. Conversely, an intervention that reduces losses and stabilises operations can demonstrate improvement long before the next refinancing.

BalGreen can occupy the intervention layer within this architecture. DOIX observes and verifies; BalGreen identifies the economic source of vulnerability and designs the operating package required to correct it; the company implements the improvement; DOIX verifies the outcome; and the financial architecture can use the new information to reconsider the economic risk of the asset.

This does not mean a smart contract should automatically change a haircut or liquidate a position every time a sensor reading moves. Confusing automation with credit judgement would create substantial new risks. The valuable change is that information arrives earlier. Lenders, insurers and investors can establish thresholds, covenants and review processes using more frequent evidence while material decisions remain governed by credit models, human oversight and regulation.

Future collateral can become more mobile and more dangerous

The same infrastructure capable of reducing friction introduces new vulnerabilities. If assets can be mobilised almost instantaneously and contracts can execute automatically, financial crises can accelerate as well.

A margin call that previously required hours of processing can move closer to immediate execution; collateral can migrate among institutions with less friction; liquidity demands can become more concentrated; and software failures, cyber vulnerabilities or incorrect information fed into smart contracts can generate financial consequences before human intervention becomes possible.

Legal questions also become critical: which record ultimately proves ownership, what happens when a token represents a claim over a physical asset, how is collateral enforced across jurisdictions, who is liable when infrastructure fails and how are creditor priorities preserved during insolvency?

Europe also appears conscious of another fundamental risk: fragmentation. A financial economy built across hundreds of incompatible ledgers could become less efficient than the system it intends to replace. This is why Appia explicitly examines shared-ledger and interoperable-network models and why the ECB continues to emphasise central bank money as a common settlement anchor.

Financial innovation does not achieve scale merely by creating additional platforms. It requires standards, interoperability, identity, legal certainty and trusted money. The tokenisation race will not be won by the jurisdiction issuing the largest quantity of tokens. It will be won by the system capable of connecting those assets without fragmenting liquidity or undermining trust.

BalGreen verified assets: Physical infrastructure can enter the digital financial architecture

BalGreen's largest opportunity appears when these developments are connected with real infrastructure. A modernised factory, battery system, port terminal, microgrid, water network or energy facility produces economic flows capable of supporting long-duration finance.

When these assets have reliable baselines, monitoring and continuous verification, they can become Verified Assets before any tokenisation takes place. The financial rights connected with them can then be structured through bonds, private credit, project finance, securitisation, performance contracts or, when legal and technological frameworks permit, tokenised instruments.

Beginning with the token would reverse the economic logic. The correct sequence begins with the underlying asset: identify the loss, correct it, verify the result, establish the cash flow, structure the instrument and only then choose the most efficient financial infrastructure through which to distribute it.

This approach also prevents BalGreen from becoming a company chasing technology trends. We do not need to sell blockchain. We need to create stronger assets whose information can integrate into whichever financial infrastructure markets ultimately adopt.

If DLT becomes the preferred architecture for certain instruments, DOIX should be capable of providing interoperable verified data. If other functions continue operating through conventional databases, the same economic system should remain valid. The value does not reside in a particular technology. It resides in the ability to demonstrate what an asset produces, what risks it contains and how those risks change following intervention. Tokenisation can amplify that value through easier distribution, programmability and settlement, but it cannot replace the fundamental work of building an economically defensible asset.

Analysis

We are entering a phase in which collateral can evolve from a relatively static guarantee into a financial entity continuously connected with identity, ownership, market infrastructure and performance. If this transformation succeeds, financial institutions will be able to know more rapidly which assets are available, where they sit, who possesses rights over them and under what conditions they can be mobilised.

This can reduce capital trapped by operational friction, improve treasury management, accelerate settlement and expand the range of financial instruments that can circulate among investors. Yet greater speed requires stronger governance. A financial system operating closer to real time cannot safely depend on defective data, poorly designed smart contracts, incompatible networks or risk models unable to understand the underlying asset.

The most interesting economic opportunity is therefore not simply tokenising existing assets but creating a new category of financial assets in which operational evidence becomes part of the trust architecture. A BESS facility can continuously demonstrate that it preserves the capacity and efficiency underlying its financing assumptions; a factory can show that financed improvements continue producing savings; a port can demonstrate throughput and availability; infrastructure can verify that the cash flows supporting a security continue to exist.

In such an environment, DOIX can function as the evidence layer and BalGreen as the improvement layer. Global investors would no longer be buying only a transition narrative. They could purchase yields generated by assets whose performance can be observed with a depth that traditional markets rarely possessed.

The decisive question is what happens when this logic combines with collateral mobility. If a verified asset can support credit, move digitally between institutions, access several financing markets and settle against central bank money with lower friction, capital efficiency can improve materially.

The same architecture can also magnify rehypothecation, concentration and shock transmission if governance fails to keep pace. The correct destination is therefore not "everything on-chain". It is an architecture in which every increase in speed is matched by an equivalent control mechanism, every automated process has clear accountability and every piece of data capable of moving capital can be audited.

Conclusion

Collateral is entering the digital economy, but the deeper transformation has only begun. Since March 2026, qualifying assets issued through DLT infrastructure can already be accepted by the Eurosystem under the relevant eligibility framework; Pontes is scheduled for September to enable wholesale DLT transactions to settle in central bank money; Appia is working toward a more integrated European architecture with a blueprint planned for 2028; and Project Agorá has demonstrated that atomic settlement across currencies and jurisdictions using tokenised forms of commercial bank money and central bank reserves is technically feasible.

These developments do not indicate that conventional finance is disappearing. They indicate that finance is building a new programmable layer on top of itself.

For BalGreen, the opportunity is not tokenisation for its own sake. It is making physical assets sufficiently measurable, efficient and verifiable to enter this new financial architecture with superior economic quality. DOIX measures the asset, BalGreen reduces its vulnerabilities, DOIX verifies the improvement, cash flow becomes a structurally financeable yield, the financial instrument can be digitalised where appropriate and capital can move with greater speed and better information.

The conceptual progression is powerful: operating losses first become recovered cash flow; that cash flow can then support debt, bonds or investment instruments; and tokenised infrastructure can ultimately allow those financial rights to circulate with less friction.

The asset of the future will not be valuable because it is on-chain. It will be valuable because it produces, can prove that it produces and can convert that production into a secure, transferable and verifiable financial right. Blockchain may transport that right. Central bank money may settle it. Investors may finance it. But value will continue to originate in the physical economy.

The collateral of the future will not simply be digital. It will be digital, verifiable and economically alive.

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