The company collaborated with various partners such as Polygon and SBI Digital Markets to create blockchain-based trading infrastructure, becoming one of four applicants to receive approval in this field.

21X announced on December 3 that it has received a license to operate a blockchain-based trading and settlement system that is subject to European financial regulations.

This license was granted by Germany’s financial regulator BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) and allows the company to launch an exchange for tokenized financial instruments based in Frankfurt.

Following approval, 21X is expected to be operational in the first quarter of 2025. The platform will reportedly offer a range of services such as tokenization, issuance, distribution, listing and trading.

The EU’s DLT Pilot Regime provides a legal framework for trading and settlement of crypto assets that are considered financial instruments under the Markets and Financial Instruments Directive (MiFID II).

This regime came into force in March 2023 and aims to facilitate the establishment of new market infrastructures. These infrastructures include DLT-based multi-party trading facilities, DLT settlement systems, and DLT trading and settlement systems.

The licensing process took approximately 18 months, and 21X cooperated with many regulatory authorities, including BaFin, the German Federal Bank, the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB).

Max Heinzle, the company’s founder and CEO, stated that the license is not only a regulatory approval but also a revolutionary step for capital markets. Heinzle made the following statements:

“For the first time, institutional and individual investors will be able to buy and sell tokenized securities on a fully regulated blockchain-based exchange with levels of trust and compliance equivalent to traditional markets.”

21X leverages Polygon’s advantages such as low transaction costs, fast transaction times and strong security measures in the development of its tokenization platform.

Additionally, in early December, 21X announced a strategic partnership with Web3 service platform Chainlink. Chainlink has been described by 21X as “the standard for on-chain finance”.

According to ESMA’s statement, 21X is one of four companies that have applied for a license under the EU’s DLT Pilot Regime.

As of April 2024, an application for a DLT trading and settlement system and a DLT multilateral trading facility came from Germany, a DLT settlement system application came from the Czech Republic, and another DLT trading and settlement system application came from the Netherlands.

According to ESMA’s list of authorized DLT market infrastructures, the Czech Republic’s CSD Prague received permission to operate under the EU’s DLT Pilot Regime on 11 October. This shows that Europe’s regulatory framework for blockchain-based financial infrastructure is increasingly being adopted.

This step by 21X stands out as an important development that reflects the increasing impact of blockchain technology on capital markets and the EU’s efforts to create a regulatory infrastructure that supports this technology.