EU taps industry to set standards for tokenized securities
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EU institutions have opened nominations for the European Tokenisation Standards Group, with applications due on November 27. The effort is aimed at writing common rules for holding and settling tokenized securities across DLT and traditional market infrastructure, with work expected to start in January 2027 and initial standards targeted for early 2028.
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What it means
The EU has run a DLT Pilot Regime since 2023, letting market infrastructures test blockchain-based trading and settlement under temporary exemptions from the Central Securities Depositories Regulation. That scheme exposed gaps: no common rulebook for who custodies tokenized bonds and shares, or how settlement across DLT and traditional systems should reconcile. The new group, opened for nominations on November 9 by the Commission, ECB and ESMA, is meant to close that gap before any EU law makes common standards compulsory.
Banks, custodians and technology vendors now have until November 27 to nominate experts, and whoever sits on this group effectively drafts the rules the rest of the market will later have to follow. Firms already running tokenization pilots, such as large custodian banks and exchange groups, gain a direct hand in shaping custody and settlement mechanics before legislation locks them in. Smaller fintechs without lobbying resources risk being shut out of the room where those defaults get set.
Letting industry write its own rulebook ahead of binding law is efficient, since regulators lack the technical depth that custodians and infrastructure operators have built through live pilots. It also raises the familiar risk that incumbents shape standards to suit systems they have already deployed, narrowing the field for later entrants. The emphasis on coordination rather than approving crypto tokens is a deliberate line: this is about plumbing for regulated securities, not a backdoor endorsement of public blockchain assets. (per newsbtc.com)
Work is not scheduled to begin until January 2027, more than a year after nominations close, leaving time for the group's composition and mandate to be contested. The first concrete test comes in early 2028, when initial standards for holding and settling tokenized securities are due. Whether those standards bind DLT platforms and legacy depositories under one framework, or simply codify practices big custodians already use, will show whether this exercise levels the market or cements the position of today's largest players.
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