An EU pilot program using distributed ledger technology (DLT) will start in 2023. The Liechtenstein fintech 21Finance wants a leading role and is offering digital marketplace software.
Distributed ledger technology is considered a core technology for the development of digital marketplaces. With the launch of a pilot program in the EU, Liechtenstein-based 21Finance, founded in 2017, aims to position itself as a leader in this field. It is currently in the process of establishing a company in Germany to implement a DLT trading and settlement system (TSS), 21Finance said in a statement.
DLT, or «distributed ledger of accounts,» refers to a decentralized database allowing networked participants to share read and write permissions. This enables the creation of digital trading venues offering investors direct access to DLT financial instruments and their own custody, eliminating the need for investors to go through financial intermediaries.
Regulatory Sandbox
The pilot program comes in the form of a «regulatory sandbox», opening the door to DLT technology and expanding the scope for the financial industry. For example, DLT market infrastructures will be exempt from certain MiFID II and/or Central Securities Depository Regulation (CSDR) regulations. The program will initially run for three years and the experience gained will be evaluated by EU member states together with the European Securities and Markets Authority (ESMA).
21Finance is taking a pioneering position in the development of DLT-based market infrastructures, it added. «We invite capital market participants and other interested parties to join our project - the realization of the first multilateral trading and settlement system for tokenized stocks, bonds, and funds in Europe,» says 21Finance CEO Max Heinzle.
