21X, a Frankfurt-based fintech focused on supporting institutional adoption of tokenised securities, has secured a licence to operate a blockchain-based trading and settlement system from Germany’s financial supervisory authority, BaFin.
21X is now a fully regulated financial institution in accordance with European Union (EU) law and plans to launch an exchange for tokenised financial instruments from its Frankfurt headquarters in the first quarter of 2025.
By leveraging blockchain technology, 21X plans to make its mark on capital markets through the trading and settlement of tokenised 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 tokenisation, issuance, distribution, listing, and trading – all within the robust regulatory framework established by the EU.
BaFin issued the licence 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). The regime is the result of an 18-month process between 21X, BaFin, the German Federal Bank (Deutsche Bundesbank), the European Securities and Markets Authority (ESMA) as well as the European Central Bank (ECB).
Max Heinzle, CEO of 21X
Max Heinzle, CEO of 21X, underscored the importance of the news: “For the first time, institutional and retail investors can trade and settle tokenised 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 tokenised 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.”
Capitalising on future growth
The tokenised securities market is tipped to exceed $30trillion in trading volume by 2030, driven by blockchain’s efficiencies and increasing institutional adoption. By launching its new exchange, 21X hopes to sit at the forefront of this rapidly growing market.
Marc Hegen, CTO of 21X
Marc Hegen, CTO of 21X, also added: “The DLTR allows us to make extensive use of distributed ledger technology and its fundamental advantages. We will be able to list natively tokenised 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 also plans to team up with financial institutions from around the globe as it looks to list a wide variety of financial instruments on its exchange for tokenised securities.
21X worked alongside partners, including Polygon, Apex Group and SBI Digital Markets, to build a rounded ecosystem that enables customer participation in digital asset 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.
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