TL;DR: As digital asset experimentation continues at a pace in jurisdictions across the globe, it’s becoming increasingly clear that there is no single approach emerging among regulators. The European Central Bank (ECB) is preparing to invest its own funds in tokenized securities while building infrastructure to settle them in central bank money, just as South Korea announces tests of blockchain-based deposit tokens for government payments. Meanwhile, in Russia, where a new digital asset regime is taking effect, the central bank is proposing new capital-based limits on banks’ exposure to cryptocurrencies and foreign digital instruments.
Key Takeaways:
ECB to invest in tokenized securities
On Monday, the ECB launched a project to gain practical experience with investments in tokenized securities and distributed ledger technology (DLT) by investing a small portion of its own funds in tokenized securities.
Initial investments will focus on euro-denominated securities issued by eurozone governments, regional governments, agencies, and European supranational institutions, with transactions to be settled in central bank money in the Eurosystem’s new settlement solution for DLT transactions, “Pontes.”
In addition, the bank said its own funds portfolio would be a non-monetary policy portfolio that provides the ECB with income to help fund operating expenses, excluding those related to the delivery of its supervisory tasks.
In a September 21 press release announcing the move, the ECB claimed that the project would support the Eurosystem’s broader strategy to make central bank money “fit for the digital age.”
“The Eurosystem is working to enable a more integrated, innovative and resilient European financial market in the digital age,” said Christine Lagarde, president of the ECB. “We will continue to make progress in close collaboration with the market.”
Key elements of the strategy are Pontes, the Eurosystem’s solution for settling tokenized assets in central bank digital currency (CBDC)—which was also launched on September 21—and Appia, an initiative launched in 2025 to shape the development of a European tokenized financial ecosystem.
On the former, Pontes builds on 2024 tests using DLT for CBDC settlement, during which stakeholders from the public and private sectors reportedly indicated that access to a risk-free settlement asset was crucial for the wider adoption of the technology.
“Pontes brings the stability and trust of central bank money to the European tokenised finance ecosystem,” said Piero Cipollone, member of the ECB’s Executive Board. “It will give an important advantage to help it scale.”
According to the ECB, the market is already showing interest in Pontes, with an initial group of market participants and DLT operators having completed onboarding and are ready to start using it, including Deutsche Bank (NASDAQ: DB), the European Investment Bank, Santander, Cashlink, and Clearstream.
Together with Appia, the ECB said Pontes would “deliver a blueprint for a tokenized financial ecosystem in Europe.”
“Tokenized financial markets continue to evolve, alongside the development of new DLT-based market infrastructures,” the bank said. “By investing directly, the ECB will gain first-hand experience across the full investment lifecycle, including trade execution, settlement, systems and portfolio management activities.”
Regarding its own investment in tokenized securities, the ECB said that once the preparatory work is complete, its Executive Board will determine the operational details and timing of the investments, taking into account developments in tokenized issuances and the broader tokenized financial ecosystem in Europe.
Other jurisdictions have been exploring similar projects, including Switzerland, where the Swiss National Bank’s Project Helvetia is testing the settlement of tokenized assets in central bank money, including wholesale CBDC on the SIX Digital Exchange and an RTGS link between the DLT-based BX Digital platform and the Swiss Interbank Clearing system. The Bank for International Settlements (BIS) has also been coordinating Project Agorá, which involves eight central banks and more than 40 private-sector financial institutions testing tokenized central bank reserves and commercial bank deposits for wholesale cross-border payments.
Meanwhile, private sector institutions have also dipped their toes in the area, such as the European Investment Bank (EIB), which in June 2026 issued the first DLT-native commercial paper on Clearstream’s D7 platform; and Deutsche Bank, which participated in Project Agorá’s 2026 real-value testing, completing a €10,000 ($11,448) euro-denominated treasury payment as an intermediary between Lloyds Banking Group and CaixaBank.
The ECB’s initiatives point to the development of market infrastructure and institutional participation around tokenized assets. Meanwhile, South Korea is taking the technology into a more immediate, transactional setting by using tokenized bank deposits to make payments in the public sector.
South Korea to test CBDC-backed deposit tokens
South Korea will soon begin a pilot to pay government ministry operating expenses using digital currency “deposit tokens” instead of physical cards.
The South Korean Ministry of Science and ICT held its 45th ICT Regulatory Sandbox Review Committee meeting on September 21, at which it designated nine demonstration special cases, including the “Pilot Project for Utilizing Blockchain-Based Digital Currency for Government Treasury Funding,” according to a report on September 22 from local outlet The Chosun Daily.
The pilot will allow participating public officials to pay for business and other expenses using deposit tokens by scanning QR codes with their smartphones, instead of physical cards.
Up to now, South Korea’s National Treasury Fund Management Act has restricted payment methods for office operating expenses to government purchase cards or bank transfers, making the use of digital currency impossible. However, under the pilot, transactions will use deposit tokens that are processed by a blockchain-based system and settled simultaneously with the payment. They can also pre-designate items or industries that cannot be used as business promotion expenses to block payments.
Per the Chosun Daily report, the Ministry of Science and ICT expects payment fees to decrease and payments to be received immediately, easing the burden on small business owners. In addition, it hopes it will be easier to verify where business promotion expenses are used, thereby increasing transparency in execution.
Several South Korean banks have signed up to participate in the pilot, including NH Nonghyup, Shinhan, Woori, IBK Industrial, and Hana Bank.
The deposit tokens to be used in the new pilot serve as the payment method for “Project Hangang,” a Bank of Korea-led live pilot in which commercial banks are testing a unified ledger that allows wholesale CBDC and tokenized bank deposits to be used together for institutional payments and settlement.
The first phase of Project Hangang began in April 2025 and allowed up to 100,000 people to use deposit tokens issued by participating banks. Users were able to convert funds held in bank accounts into tokens through banking applications and make QR code payments at approved merchants.
It was reported that the second phase of Project Hangang began in March of this year, with nine additional banks expanding the system beyond the original seven institutions, and government subsidy payments becoming one of the live use cases. The upgraded system also introduced person-to-person wallet transfers, biometric payment approvals, and automatic wallet top-ups.
The South Korean pilot illustrates how tokenized deposits could be put to work in day-to-day payments, hugely expanding the use of blockchain technology in the country. This contrasts with the latest moves by Russia, which has decided to focus on how banks should limit their exposure to, and the risks associated with, digital assets.
Bank of Russia to introduce new ratios to limit crypto risks
The Bank of Russia has proposed capping banks’ calculated risk exposure to digital currencies and foreign digital instruments at 1% of capital, in the wake of Russia’s new legal framework for digital currencies and digital rights taking effect in September.
The proposal would introduce two maximum risk ratios, N31 for individual credit institutions and N32 for banking groups on a consolidated basis, with the upper limit for transactions involving digital currencies and foreign digital instruments set at 1%.
According to the central bank’s September 18 announcement, the ratios take into account not only direct investments in such assets, but also investments in digital currency derivatives. If assets involve low freezing and liquidity risks, the regulation allows the netting of short and long positions. The calculation of the new ratios will not include clients’ positions, which banks are not responsible for in case of sanctions risk arising.
The bank plans to require credit institutions to record the turnover for such instruments, along with N31 and N32 values, in their reporting starting from January 2027, with relevant reporting forms currently being developed.
In terms of specifics, the draft regulation distinguishes between two categories of digital asset-related exposure, with the classification reflecting factors such as sanctions, settlement, and liquidity risks. The distinction also determines whether banks can offset long and short positions when measuring their exposure.
Group 1 covers transactions that the Bank of Russia considers to be lower risk. These include certain exchange-traded derivatives that are settled in cash, qualifying over-the-counter derivatives, and transactions with counterparties that meet specified credit-quality standards. Some transactions involving cryptocurrency miners may also fall into Group 1, provided they meet certain conditions, including limits on how much of a miner’s income comes from selling digital assets.
Group 1 can also include derivatives that involve actual delivery of the underlying asset, certain loans and credit facilities, guarantees, repo transactions, and bonds—provided that the transaction can be settled in rubles or in the currencies of countries that Russia does not classify as “unfriendly.”
For Group 1, banks are generally allowed to offset opposing positions when calculating the amount that counts toward the regulatory limit. For example, a bank’s long position can partly or fully offset a corresponding short position.
There is an exception when the two positions have different maturity dates. In that case, the proposal applies an adjustment coefficient that increases as the difference between the maturities gets larger. The coefficient starts at 5% and increases to 85% when the maturity difference is 37 months or more.
Group 2 covers transactions that the proposal treats as higher-risk exposures. These include direct investments in digital currencies and foreign digital assets, loans that can be repaid or settled only in those assets, specified repo transactions, and derivatives that do not meet the requirements for inclusion in Group 1. Other transactions involving digital assets that do not qualify for Group 1 are also placed in Group 2.
For Group 2, banks cannot fully offset opposing positions when calculating their exposure for the regulatory limit. Instead, for each relevant asset, the bank uses whichever is larger: its total long position or its total short position.
The proposal also introduces a 1,250% risk coefficient for capital adequacy calculations, which applies to the relevant overall measure of a bank’s exposure to digital asset risk, as well as to certain client positions in which the bank has a specified responsibility for losses arising from restrictions on those assets.
In practical terms, the 1,250% coefficient means these exposures receive very heavy capital treatment, such that banks would need to hold substantially more regulatory capital against these exposures than against lower-risk assets.
The Bank of Russia said that the proposals, which are expected to be officially published in the fourth quarter of 2026 and would take effect 10 days after publication, were intended to “limit risks associated with investment in cryptocurrencies and foreign digital instruments.”
The move comes as Russia’s new legal framework for digital currencies and digital rights begins to take effect, following its passage by Russia’s State Duma in July and signing into law by President Vladimir Putin on August 4, 2026.
The Federal Law No. 282-FZ, or “On Digital Currencies and Digital Rights bill,” establishes a framework governing the organization, accounting, and circulation of digital currencies and foreign digital instruments, as well as the activities of digital currency exchange organizations, digital depositories, and other financial market participants.
Its main provisions took effect on September 1, 2026, creating a regulated framework for digital-currency transactions and setting rules governing access to the market by different categories of investors; some remaining provisions will not take effect until July 1, 2027, or September 1, 2027.
The law also contains transitional arrangements for existing market participants. These include provisions allowing certain existing digital-asset exchange operators to continue operating under the previous regime until March 1, 2027, while various organizations moving into the new registers for digital currency exchanges and digital depositories have until September 1, 2027, to bring their activities into compliance with the new framework.
The new Russian central bank proposal could be read as a sign of growing caution, with the bank expecting exposure to digital asset activity to increase substantially as the regulatory framework gradually comes into effect.
Alongside developments in the EU and South Korea, the proposal highlights two core concerns that almost all jurisdictions continue to juggle when it comes to digital assets: supporting innovation and maintaining consumer protection.
FAQ:
What is the ECB doing with tokenized securities?
The ECB is preparing to invest a small portion of its own funds in tokenized securities, initially focusing on euro-denominated securities issued by governments, agencies, and European institutions. The investments are intended to give the central bank practical experience with tokenized markets, including trading, settlement, systems, and portfolio management.
What is Pontes?
Pontes is the Eurosystem’s new settlement solution for distributed ledger technology transactions. It is designed to allow tokenized assets to be settled using central bank money, bringing central bank settlement infrastructure into Europe’s developing tokenized financial ecosystem.
What is South Korea testing with deposit tokens?
South Korea plans to test blockchain-based deposit tokens for government ministry expenses. Officials will be able to make payments by scanning QR codes with smartphones instead of using physical government purchase cards.
Which South Korean banks are involved in the blockchain pilot?
Participating banks include NH Nonghyup, Shinhan, Woori, IBK Industrial, and Hana Bank.
What are Russia’s proposed digital currency exposure limits for banks?
The Bank of Russia has proposed limiting banks’ calculated exposure to digital currencies and foreign digital instruments to 1% of capital.
What is Russia’s 1,250% crypto risk coefficient?
The proposal introduces a 1,250% risk coefficient for relevant digital-asset exposures in capital-adequacy calculations. This would require banks to hold more regulatory capital against those exposures than against lower-risk assets.
When did Russia’s new digital-asset framework take effect?
Russia’s Federal Law No. 282-FZ took effect in part on September 1, 2026. It establishes rules governing digital currencies, foreign digital instruments, exchanges, digital depositories, and other financial market participants, with additional provisions scheduled for 2027.
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