tl;dr
German-based 21X has obtained a license from Germany's financial authority, BaFIN, to operate a blockchain-based trading and settlement system under EU rules. The company plans to launch a trading platform for tokenized financial instruments in 2025, complying with the EU's DLT Pilot Regime. Additio...
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German-based 21X obtains EU license, eyes tokenization platform
12 December, 2024 - By Wahid Pessarlay
21X, a Germany-based financial institution, has been licensed to operate a blockchain-based trading and settlement system under extant European Union (EU) rules. The company announced it had received full approval from Germany’s leading financial authority, BaFIN, after 18 months of regulatory scrutiny. The license issuance is the first of its kind and will see 21X wade into tokenized securities as a major service provider in the region. The license complies with the legal framework provided by the EU’s DLT Pilot Regime, a rulebook establishing the guidelines for new financial market infrastructures revolving around blockchain.
Launching in 2025, the German-based 21X is the first firm to clinch an operational license under its parameters, collaborating with the European Central Bank (ECB) and the European Securities and Markets Authority (ESMA). 21X says it will roll out a trading platform for tokenized financial instruments with a commercial rollout earmarked for Q1 of 2025. Designed for institutional and retail traders, the incoming platform will rely on a public blockchain rather than a close-ended one in compliance with the EU’s regulatory playbook.
The rise and rise of tokenized securities
The concept of tokenized securities is gathering significant steam in financial circles, with several reports touting their benefits over traditional offerings. Research by Tren Finance predicts that tokenized real-world assets can reach a market capitalization of $30 trillion before the end of the decade, buoyed by massive institutional adoption. Several players in Southeast Asia have begun tinkering with the concept, adopting a cautious approach to prevent upsetting the balance of the ecosystem.
BlockInvest partner MGA can now operate as digital security registry in Italy
As the EU DLT Pilot Regime gathers steam, Italian-based firm Milano Global Advisors (MGA) has been licensed by Italian authorities to operate as a digital securities registry. The approval comes on the heels of intense regulatory back and forth between MGA and Italian financial watchdogs as the country seeks to embrace sweeping changes across Europe. Per the report, MGA becomes the third firm in Italy to receive approval in a framework resembling Germany’s Electronic Securities law (eWpG).
MGA CEO Cesare Suglia disclosed that the firm can operate a platform for the issuance and trading of digital securities in Italy. MGM will be able to proceed with the management and registration of digital securities while maintaining a blockchain-based register. Other ancillary services include custodial functionalities and transaction facilitation, with Suglia noting that the license will give the firm broader market access.
Turning to blockchain for the issuance of securities offers a slew of benefits for financial institutions beyond traditional systems. Financial firms can see the potential cost and time-saving benefits of blockchain-based issuances in capital market operations. While eliminating third parties and other intermediaries is seen as a step in the right direction, others are mulling the positives stemming from improved efficiency and democratization.