A practitioner's guide to the regulatory landscape for tokenised securities in Europe — what's live, what's coming, and what wealth managers need to understand now.
Regulation as a competitive weapon
While the United States is still debating which regulator is responsible for digital assets — the SEC or the CFTC, with Congress caught in between — Europe has built a complete, harmonised regulatory framework for tokenised securities. From issuance to trading, from custody to settlement.
A wealth manager operating within this framework has something their American counterpart does not: legal certainty. They know under which rules a tokenised fund can be structured, which licences a custodian requires, how secondary trading is regulated, and which investor protections apply. No grey areas, no enforcement actions that clarify the rules after the fact. Those who use that as an advantage are ahead of everyone still waiting.
The European framework in three layers
MiCA has been fully applicable since 30 December 2024. It creates a harmonised licensing regime for crypto-asset service providers across the entire EU: one licence, valid in all member states via the European passport. For wealth managers the relevance is indirect but material: the custodians, platforms, and service providers you work with for tokenised products now operate under consistent European rules.
The DLT Pilot Regime is arguably the more consequential pillar for tokenised securities. It permits authorised market infrastructures to trade, clear, and settle financial instruments on distributed ledger technology. Without the Pilot Regime, tokenised bonds, fund units, and structured notes remain confined to primary issuance with no regulated secondary market.
National securities law forms the third layer. A token representing a bond or fund unit does not escape prospectus requirements, conduct rules, or investor protection simply because it lives on a blockchain. This is the layer where jurisdiction-specific expertise matters most.
The European race: who is building fastest?
The regulation is harmonised. The implementation is not. What looks the same on paper translates into different speeds and different levels of infrastructure readiness across member states.
Luxembourg leads. Own blockchain legislation since 2019, the Blockchain IV Act in late 2024, the world's first fully tokenised UCITS, a CSSF that actively collaborates with the market. The European Investment Bank issued digital bonds there in 2021. Coinbase, Zodia Custody, and Ripple chose Luxembourg as their European hub. Franklin Templeton, Standard Chartered, and UBS are developing tokenised fund initiatives there. In late 2025, Luxembourg's sovereign wealth fund announced a one per cent allocation to digital assets.
Germany follows closely. The electronic securities act (eWpG) enables bond issuance on a blockchain without paper certificates. BaFin has granted roughly 21 CASP licences. 21X in Frankfurt — the EU's first blockchain-native securities exchange — settles trades in two seconds. Cashlink facilitated a €100 million bond for NRW.BANK.
France is the challenger. The PACTE Act preceded MiCA. The AMF certifies smart contracts. Société Générale launched EURCV, one of the first euro stablecoins from a major European bank.
The Netherlands has a strong starting point. The AFM granted MiCA licences on day one. Roughly fourteen licences have been issued. The grandfathering period, at six months, is among the shortest in Europe. ABN AMRO issued a digital green bond.
But: no electronic securities act like Germany. No DLT Pilot Regime applications. No tokenised fund ecosystem comparable to Luxembourg. The AFM is competent, but the broader ecosystem — platforms, custodians, exchanges — lags behind the neighbours.
Jurisdiction as a strategic choice, not a relocation
A Dutch wealth manager who structures a tokenised fund in Luxembourg or issues a bond under Germany's eWpG does not need to relocate. The product lives on-chain. The client notices no difference. Distribution runs through the European passport.
This is how the fund industry has worked for decades. Most funds that Dutch wealth managers offer their clients are Luxembourg UCITS or Irish funds — not because the manager sits in Dublin, but because the regulatory infrastructure there is best suited for the product. Nobody calls that relocating. It is called structuring.
With tokenisation the same applies, amplified. A tokenised fund under Luxembourg's Blockchain IV Act can be offered to Dutch investors via AIFMD or UCITS passporting. A bond under the eWpG can be distributed to Dutch clients through the European passport. The Prospectus Regulation, MiFID II, AIFMD, and UCITS are explicitly built on this passport mechanism. The DLT Pilot Regime adds another dimension: an exchange in Frankfurt can facilitate trading for investors in Amsterdam without a separate Dutch licence.
Waiting for the Netherlands to adopt its own electronic securities act means giving your neighbours a two-year head start. Using Luxembourg or Germany as a product jurisdiction and distributing to Dutch clients via passporting is possible today.
The DLT Pilot Regime: small but decisive
By late 2025 four entities had been authorised across the entire EU. CSD Prague on R3 Corda. 21X in Frankfurt on Polygon. 360X AG as a multilateral trading facility. Securitize in Spain on Avalanche. Zero in the Netherlands.
The European Commission is preparing an extension and expansion as part of the Market Integration Package. The regime will likely become permanent, with expanded limits. It works cross-border — but the innovation is happening elsewhere.
Five problems nobody is solving fast enough
Secondary market liquidity. Tokenised bonds reached €1.7 billion by October 2025. Real growth, but thin. Without a liquid secondary market, a tokenised product is functionally no better than the traditional equivalent.
Settlement without central bank money. No digital euro for DLT settlement. The Commission proposes regulated stablecoins as a stopgap. The ECB is working on wholesale CBDC initiatives (Pontes, Appia), but production is not there yet.
Euro stablecoin sovereignty. Dollar-denominated stablecoins represent roughly 90 per cent of market capitalisation in Europe (EBA/ESMA, January 2025). If tokenised securities settle in dollars, Europe creates a dollar dependency in its own capital markets.
Interoperability between old and new. Tokenised securities need to connect to existing custodians and CSDs or replace them. Canton Network and Swift's tokenisation interlink are building bridges, but most institutions will run hybrid infrastructure for years.
Custody in insolvency. What happens to tokenised securities when the custodian fails? Segregation rules are not fully worked out across all jurisdictions. As long as that certainty is missing, institutional allocation faces a threshold.
What this means
Use regulation as an advantage. MiCA is in force. The DLT Pilot Regime is operational. Waiting for full clarity means waiting for something that does not arrive during infrastructure transitions.
Make the jurisdiction choice now. A Luxembourg fund structure or German bond wrapper requires preparation, legal coordination, and partner relationships. You build those before you launch.
Turn regulatory knowledge into an advisory service. The wealth manager who can tell a client: 'this product is structured in Luxembourg, settled via a DLT exchange in Frankfurt, and offered to you through European passporting' — delivers something no platform automates.
Vyzor Capital provides independent tokenisation advisory for wealth managers and asset managers — from feasibility analysis to partner evaluation to pilot implementation, across jurisdictions.
vyzor.capital · info@vyzor.capital