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.
Background on blockchain, regulation and the EU license
Blockchains enable the tokenization of real-world assets (RWA), converting physical assets into digital tokens that can be easily traded, transferred, and managed using distributed ledger technology. These tokens act as digital certificates of ownership, representing assets and associated rights in a programmable, automated way. Once created, tokens are securely recorded on the blockchain, ensuring immutability and tamper-proof integrity.
Tokenized assets represent digital versions of real-world financial assets, such as stocks, bonds, or real estate, that are traded on a blockchain-based exchange. Unlike traditional finance systems, which rely on multiple intermediaries (such as brokers and clearinghouses), tokenized assets can be traded directly between parties on a DLT platform, allowing for faster, more efficient, and secure transactions.
The EU’s DLT-R introduces a specific regulatory framework for DLT-based market infrastructures such as trading and settlement systems. This regime, which is part of the broader EU initiative to modernize financial markets, is designed to promote the use of blockchain technology in capital markets while ensuring a high level of investor protection and financial stability.
DLT provides a decentralized ledger where transactions are recorded in a way that is transparent, tamper-proof, and instantly verifiable by all participants. This offers immense benefits:
- Reduction in Intermediaries: By cutting out middlemen, trades are settled directly between buyers and sellers, reducing costs and complexities.
- Peer-to-Peer Trading: Traders can interact directly, creating a more fluid and decentralized market.
- Cost Savings: With fewer steps in the trading and settlement process, transaction fees and costs are dramatically reduced.
- Atomic Settlement: Trades and settlements happen simultaneously, eliminating counterparty risk and enabling near-instant settlement of transactions.
About 21X
21X is a Frankfurt-based fintech at the forefront of revolutionizing capital markets through the use of blockchain technology. As the first fully regulated digital exchange licensed under the European Union's distributed ledger technology (DLT ) regulatory framework, 21X is paving the way for the institutional adoption of tokenized securities.
21X is ideally positioned to enable smart contract-based issuance, trading and settlement of tokenized stocks, bonds and funds, offering unparalleled transparency, efficiency, and security.
In December 2024, 21X secured its license to operate its groundbreaking DLT trading and settlement system (DLT TSS) trading venue, a milestone that positions the company as a leader in the transition to digital finance. 21X exchange is set to launch in the spring of 2025, bringing the future of capital markets to life.
See the short explainer video on 21X and our blockchain-based exchange here.
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