In a groundbreaking development poised to redefine global capital markets, 21X has become the first ever entity to receive a license to operate a blockchain-based trading and settlement system that is fully regulated in accordance with European Union (EU) law. Granted by BaFin, Germany’s financial supervisory authority, this license marks a milestone moment for tokenized capital markets globally.
21X, now regulated as a financial institution following the award of this license, plans to launch its exchange for tokenized financial instruments from its Frankfurt headquarters in the first quarter of 2025.
Harnessing the transformative power of blockchain, 21X is set to revolutionize capital markets through the trading and settlement of tokenized securities, including equity and debt securities, as well as funds – along with real-world assets (RWAs) such as real estate or artworks that qualify as eligible financial instruments. Operating on a public, permissionless blockchain network, 21X will provide an end-to-end platform encompassing asset tokenization, issuance, distribution, listing, and trading – all within the robust regulatory framework established by the EU.
Max Heinzle, CEO of 21X, underscored the significance of this milestone: “This is more than just a license – it’s a revolutionary moment for capital markets. For the first time ever institutional and retail investors can trade and settle tokenized securities on a fully regulated, blockchain-based exchange with the same level of trust, security and compliance as traditional markets.
“The EU’s regulatory framework is the key to unlocking mass adoption of tokenized money and assets. It enables self-custody; it removes clearing and corresponding settlement risks; it eliminates unnecessary complexities by reducing intermediaries – all leading to widespread efficiency gains and significantly lower costs. With benefits such as these, 21X is not just building an exchange, we are building the market infrastructure for the future of capital markets on-chain.”
The license to 21X has been issued under the EU’s DLT Pilot Regime (DLTR), a forward-thinking regulatory framework designed to enable the testing and operation of distributed ledger technology-based trading and settlement systems (DLT TSS) and is the result of a rigorous 18-month process between 21X, BaFin, the German Federal Bank (Deutsche Bundesbank), the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB).
With the launch of 21X’s exchange, the company will stand at the forefront of a rapidly expanding tokenized securities market. Analysts predict this market could exceed $30 trillion in trading volume by 2030, driven by blockchain’s efficiencies and increasing institutional adoption.
Heinzle added: “This license award is the culmination of years of hard work, dedication, and collaboration with our launch partners. We are incredibly excited to lead the charge in transforming financial markets – in Germany, Europe and across the globe. I would like to express my deepest gratitude to all our stakeholders, including employees, investors, partners and advisors who have supported us on this journey.
“Our special thanks go to the EU and German regulators who have shown visionary leadership in driving this regulation forward. Together, we are shaping the future of finance.”
21X has been working with partners to build a fully rounded ecosystem that enables seamless customer participation in digital asset markets – including Polygon, Apex Group and SBI Digital Markets. Through its collaboration with Polygon Labs, the software development company co-developing the Polygon and AggLayer ecosystems, the company is leveraging the scalability and security of a public blockchain network to execute trades and settlements on-chain.
Marc Hegen, CTO of 21X, outlined how the regulatory framework provides for true innovation. “The DLTR allows us to make extensive use of distributed ledger technology and its fundamental advantages. We will be able to list natively tokenized securities and carry out matching and settlement atomically in a single blockchain transaction. This is a real game-changer and will transform financial markets.”
In the lead-up to the launch of 21X in early 2025, the company will be teaming up with financial institutions from around the globe as they look to list a wide variety of financial instruments on Europe’s first and only exchange for tokenized securities fully regulated by the EU.
Following the award of the license, the public registers of both BaFin and ESMA will be updated to include 21X.
Source: 21X
NEWSLETTER SIGN UP
And receive exclusive articles on securities markets
