The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) and the Dutch Central Bank (De Nederlandsche Bank, DNB) issued a report on tokenisation of securities in the Netherlands. While European and Dutch law do not prohibit the use of distributed ledger technology (DLT), the current Dutch property law framework does not enable securities to be issued, held and transferred exclusively in the form of tokens. As a result, market participants generally have to rely on hybrid structures that combine a DLT-based register with a traditional securities register. This double registration limits the potential efficiency gains of tokenisation and can create uncertainty about the legal significance of the token registration.
The DLT Pilot Regime, a pilot regime for market infrastructures that facilitate trading and/or settlement using DLT, encompasses a uniform regulatory regime for all EU Member States. However, property law treatment of tokenised securities varies widely and depends on national legislation. As a result, significant differences continue to exist between national legal systems.
The AFM and DNB warn that, without timely legal clarification, investments and future financial market infrastructures may move to jurisdictions that already provide greater legal certainty. They therefore recommend a joint follow-up process involving the Dutch government, regulators and market participants. Specific use cases should be developed to determine whether clarification of the existing rules would be sufficient or whether amendments to the Dutch Civil Code (Burgerlijk Wetboek, BW) and the Dutch Securities Giro Transfer Act (Wet giraal effectenverkeer, Wge) are required. According to the regulators, timely action is important to support innovation and competitiveness and to ensure that the Netherlands remains aligned with wider European developments in digital financial markets.
The report is available here.