German fintech 21X has gained regulatory approval under the European Union’s DLT Pilot Regime to operate a blockchain trading infrastructure. The approval, granted by Germany’s BaFin, empowers 21X to launch its exchange for tokenized financial instruments from its Frankfurt base by Q1 2025.
The company announced on Dec. 3 that it had obtained a license to run a blockchain-based trading and settlement system under European regulations. The license, issued after a rigorous 18-month review process, allows 21X to establish a regulated trading and settlement platform for tokenized securities. The exchange will use blockchain to manage various assets, including equity, debt securities, funds, real estate, and artworks, in compliance with the EU’s advanced regulatory framework.
Collaborations with Polygon Enhance 21X Blockchain
21X CEO Max Heinzle emphasized the groundbreaking nature of this license, calling it a transformative moment for capital markets. The platform aims to eliminate intermediaries, reduce costs, and improve efficiency, fostering trust and compliance comparable to traditional markets. The EU framework accelerates blockchain’s integration into mainstream finance.
The EU’s regulatory setup ensures smoother operations for tokenized assets by enabling self-custody and minimizing settlement risks. 21X’s platform will facilitate asset tokenization, issuance, listing, and trading, providing a comprehensive ecosystem within a public blockchain framework. Its seamless approach promises efficiency gains across the financial sector.
21X collaborates with Polygon, Apex Group, and SBI Digital Markets to optimize its blockchain platform. Polygon’s scalability, cost-efficiency, and security enhance European DLT Exchange’s capabilities for on-chain trades. 21X has partnered with Chainlink, leveraging its Web3 services to integrate standardized solutions for on-chain finance.
The Role of the EU’s DLT Pilot Regime
The DLT Pilot Regime enables experimentation with distributed ledger technology (DLT) in financial systems. It provides the framework for tokenized securities, allowing them to be traded directly on blockchain platforms. This approach eliminates intermediaries, ensures transparency, and supports rapid transactions.
Tokenized assets are digital representations of financial instruments that benefit from blockchain’s immutability and security. Unlike traditional setups, DLT platforms streamline processes, reducing costs and increasing transaction speed. The EU initiative supports blockchain’s integration into capital markets while safeguarding investor interests.
Marc Hegen, 21X’s CTO, highlighted the potential of blockchain under the DLT Pilot Regime. The framework introduces unprecedented efficiency by enabling atomic matching and settlement within a single transaction. 21X’s exchange positions itself as a game-changer in reshaping global financial markets.
Analysts predict the tokenized securities market will exceed $30 trillion by 2030, and European DLT Exchange is poised to lead this transformation. The firm’s partnerships, regulatory alignment, and innovative approach cement its role as a pioneer in blockchain-based finance.
“Polygon proof-of-stake stands out as one of the most widely adopted protocols globally, boasting an extensive network that supports tens of thousands of decentralized applications,” 21X said in a news release in October.
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