The structural shift happened in eleven days. On 21 September 2026, the European Central Bank activated Pontes, a distributed ledger technology bridge connecting market DLT platforms to the Eurosystem's TARGET Services. Pontes is the Eurosystem's DLT solution that links market DLT platforms and TARGET Services to settle DLT-based wholesale transactions in central bank money. The initial launch took place 21 September 2026, with subsequent improvements to be introduced step by step. Deutsche Bank, Santander, Société Générale and the European Investment Bank have already completed onboarding.
Three days before Pontes went live, ECB Executive Board member Isabel Schnabel had already explained why. "To reap the full benefits, central banks need to go on-chain too," she said in remarks prepared for the annual Jackson Hole Economic Policy Symposium. "That means bringing central bank money into the tokenised environment and modernising the tools of policy implementation."
Schnabel's argument was not abstract. Private markets cannot unlock the full potential of tokenisation on their own. For tokenisation to take off, a safe and scalable settlement asset is indispensable, and this is best provided by central banks themselves. To reap the full benefits, central banks need to go on-chain too. The implication for stablecoins was direct: they are complements, not substitutes, for central bank reserves as the ultimate settlement asset.
The ECB is not alone. The Bank of England has been running its Digital Securities Sandbox since 2024. A central part of its work on tokenised assets is the Bank-FCA Digital Securities Sandbox, which launched in 2024 and runs until January 2029. It lets firms establish live UK trading venues and settlement systems for tokenised securities. The term 'sandbox' understates the point: this is live activity.
HSBC became the first company to get Bank of England regulatory approval to go live in the Digital Securities Sandbox. HSBC Orion, HSBC's digital assets platform, will be able to operate within the DSS as a Digital Securities Depository for digitally native bond issuance, servicing and settlement. That approval matters because of what comes next: the Chancellor announced that DIGIT, the UK's Digital Gilt Instrument, will be issued by Q1 2027, and the government is taking steps to prepare for potential future issuances.
A G7 government placing sovereign debt on distributed ledger infrastructure is no longer theoretical. The government is announcing that the first transaction will take place by Q1 2027 on HSBC's digital securities depository. HSBC and LSEG have signed a memorandum of understanding to deliver a bilateral Digital Securities Depository link to support investor access to the pilot issuance.
Sasha Mills, the Bank of England's Executive Director for Financial Market Infrastructure, summarised the broader intent in a speech on 1 October 2026. The point is not whether technology can tokenise a security, that question is settled. The question is whether those technical possibilities become trusted, widely-used and commercially sustainable. Mills was explicit: technology can create a token in an instant; creating a trusted market around it is the more consequential task. A tokenised security needs a legally authoritative record. Settlement must be final and irrevocable. An asset cannot realise its full value unless the cash leg can settle with comparable certainty.
This is precisely where Pontes fits. The technical term delivery versus payment resolves settlement risk: delivery and payment are linked so that either both happen or neither does. Pontes implements this for tokenised paper, using a mechanism the ECB calls a hash link, which ties the securities leg on one platform to the cash leg on the other.
At launch, Pontes runs from 08:00 to 16:00 CET on business days, with the ECB targeting full 24/7 operations by 2028. This is not the final form. The ECB has a longer-term project called Appia running in parallel. The work conducted as part of the Appia roadmap covers asset interoperability and standards, monetary policy implementation and collateral management, the future infrastructure for tokenised central bank money, cross-border transactions, as well as the ecosystem's legal and regulatory framework, and foundation for resilience. It aims to deliver a blueprint for an integrated, European tokenised financial ecosystem in 2028.
The timeline is material. Appia will feed into Pontes enhancements on a staggered basis, with the longer-term blueprint due in 2028. Over time, Pontes itself could evolve into a component of the wider Appia ecosystem.
For a VASP planning an OTC desk launch today, these dates create an architecture decision that has nothing to do with how quickly the desk can start generating revenue. The immediate pain point, that 6 to 12 months to stand up custody, liquidity sourcing, compliance infrastructure, and banking relationships, is real. But it now carries an additional constraint: the infrastructure you select must be capable of interoperating with central bank-grade settlement rails that will be operational, and expected by institutional counterparties, within 18 to 24 months.
This is not a distant future. Recent trials involving 64 participants across nine jurisdictions processed approximately €1.6 billion in transactions, testing interoperability solutions. The Bank and the FCA continue to work with 16 firms on the live issuance and settlement of tokenised assets through the Digital Securities Sandbox. The network effects are forming now.
The traditional OTC desk build decision, custody provider, liquidity aggregation, banking rails, compliance stack, has always been difficult because each layer introduces dependencies that constrain future flexibility. A custody provider that cannot interoperate with DLT-based settlement systems locks you out of the institutional flow that will soon require it. A banking relationship that cannot handle the cash leg of a tokenised security transaction becomes a bottleneck the moment a counterparty asks for DIGIT as collateral.
The Bank of England has broadened the scope of acceptable settlement assets that can be used in the DSS to include stablecoins that meet minimum requirements. Details of what this will mean in practice, and how firms can apply to use them, can be found in the updated DSS Guidance. The regulators are not closing off private settlement assets; they are specifying how those assets must connect to public infrastructure.
The question for a head of trading infrastructure is no longer whether to build for this future. The question is whether the platform architecture selected this quarter will require a rebuild the quarter after institutional clients begin trading DIGIT, settling through Pontes-connected rails, and expecting their VASP counterparties to meet them there.
The signalling from both the ECB and Bank of England has moved from exploratory to operational. Pontes is live. DIGIT is scheduled. The Appia blueprint arrives in 2028. VASPs building OTC desks on infrastructure that cannot accommodate this trajectory are not just managing time-to-market risk. They are building toward a wall.
References
[2] ECB, "Central banks on-chain," Speech by Isabel Schnabel at Jackson Hole, 28 August 2026
[3] HM Treasury, "Update on the Digital Gilt Instrument (DIGIT) pilot issuance," 16 July 2026
[4] Bank of England, "Modernising money and markets," Speech by Sarah Breeden at City Week, May 2026
[5] Bank of England, "Digital Securities Sandbox Dashboard,"
