DLT Pilot Regime: Native Tokenization and Secondary Markets

DLT pilot regime: native tokenization and secondary markets

Overview

What works and what's missing in Europe's DLT pilot regime? In this MERGE Madrid panel, Bit2Me STX, Securitize, the CNMV and Minos Securities analyze the strengths and bottlenecks of the pilot regime, the operational challenges (interoperability and settlement) and the importance of native tokenization versus less transparent structures.

What you'll learn

• What the DLT pilot regime is: trading and settling on DLT with exemptions
• Strengths: direct retail access and new settlement methods
• Bottlenecks: economic thresholds and product scope
• Operational challenges: cross-chain interoperability and settlement
• Native tokenization: legal validity of the token's transfer
• The future: expanding products, tokenized money and secondary markets

Session summary

What it is and what it brings: the CNMV explains that the DLT pilot regime allows infrastructures that trade and settle on DLT (with 2-in-1 systems, no clearing and certain exemptions), with three key novelties: direct retail access, a different settlement-finality protection and new settlement methods (stablecoins/e-money tokens, commercial money and, in the future, tokenized central bank money).

Bottlenecks: it points to the economic thresholds (caps per issuance and aggregate) and the limited product scope (shares, bonds and UCITS funds), with the expectation of improvements after the ESMA report and a response from the European Commission.

Operational challenges: Bit2Me STX, Securitize and Minos Securities highlight obtaining licenses, primary and secondary liquidity, connecting to multiple chains, migrating the registry from the primary market (ERIR) to the secondary, and above all interoperability between DLT infrastructures and the lack of European harmonization.

Native tokenization: the panel insists on distinguishing native tokenization —with legal validity of the token's transfer, after the reform of Spain's Securities Market Law— from SPV-type structures (“croquetization”), recalling that a bad product tokenized is still bad and that regulation is technology-neutral.

The future: it foresees expanding the scope (funds and complex debt), giving certainty on the regime's permanence and advancing settlement; four DLT infrastructures are already authorized in Europe and several advanced projects exist in Spain (according to the talk).

Watch the full talk

Watch the full recording on MERGE's YouTube channel, with Bit2Me STX, Securitize, the CNMV and Minos Securities on the DLT pilot regime.

FAQs

What is the DLT pilot regime?
According to the talk, a European regulation that allows market infrastructures to trade and settle on DLT, with certain exemptions versus the traditional market.

What are its main limits?
According to the talk, the economic thresholds and the product scope (shares, bonds and UCITS funds), as well as interoperability.

What is native tokenization?
According to the talk, when the token's transfer on the chain has full legal validity, versus tokenizing through intermediate structures.

Is this investment or legal advice?
No. This content is informational and summarizes what was presented in the panel; it does not constitute investment or legal advice. Consult a professional for your specific situation.