As tokenisation gains traction across financial markets, regulatory approaches are evolving in ways that aim to support clarity, accountability and legal certainty. While regulators often share similar objectives, including responsible adoption, market integrity, investor protection and operational resilience, their approaches to tokenisation reflect differences in legal frameworks, market structures and supervisory priorities.
These differences have produced a range of regulatory strategies, including adapting established financial services frameworks, reform of legal and market infrastructure to accommodate tokenisation, and using structured experimentation and transitional regulatory environments to test emerging models in practice.
Collectively, these approaches illustrate how jurisdictions are seeking to integrate tokenisation into existing financial ecosystems while balancing innovation with legal certainty and appropriate regulatory oversight[i]. This article examines those strategies across selected jurisdictions[ii] and considers how regulatory adaptation is shaping the development of tokenised financial markets.
A: Adaptation of existing financial services frameworks
Against this backdrop, some jurisdictions have opted to adapt established financial services frameworks to accommodate tokenisation. Under this model, tokenisation is integrated into existing regulatory structures by applying established legal concepts to digitally represented interests or assets and introducing targeted legislative amendments or supervisory guidance where necessary. The underlying regulatory architecture remains largely intact, with regulatory treatment generally determined by the nature of the underlying asset or activity rather than the technology used to record, represent or transfer it.
The Cayman Islands
The Cayman Islands exemplifies this approach. Rather than introducing a separate regulatory regime for tokenised fund interests, the Cayman Islands has adapted its existing funds framework through targeted amendments to the Mutual Funds Act[iii] and Private Funds Act[iv], to address the treatment of digital representations of fund interests [v]. These amendments preserve the existing legal and regulatory character of fund interests by clarifying that digital representations remain subject to the existing funds regulatory framework, while allowing their issuance and transfer in tokenised form[vi]. In this respect, Cayman's approach prioritises continuity, legal certainty and technological neutrality within its existing regulatory architecture.
Hong Kong
Hong Kong similarly regulates tokenised investment products within its existing securities framework, supported by progressively expanded guidance from the Securities and Futures Commission (SFC). In 2023, the SFC issued separate circulars addressing (i) intermediaries engaging in tokenised securities related activities[vii] and (ii) the tokenisation of SFC authorised investment products[viii]. The framework’s subsequent expansion addressed supervised secondary trading of tokenised SFC authorised investment products on licensed virtual asset trading platforms, together with requirements relating to pricing, liquidity, orderly trading and disclosure[ix]. Complementing the SFC's framework, the Hong Kong Monetary Authority issued guidance setting out supervisory expectations for authorised institutions providing digital asset custodial services[x] and engaging in the sale and distribution of tokenised products[xi]. Hong Kong's regulatory framework has supported a number of live tokenised issuances, including tokenised government green bonds[xii], demonstrating the practical application of its existing securities framework to tokenised financial products.
Singapore
Singapore likewise accommodates tokenisation within its existing financial services framework. The Monetary Authority of Singapore (MAS) has consistently adopted a technology neutral approach, regulating tokenised capital markets products according to their legal and economic substance rather than the technology through which they are represented. Consistent with the principle of "same activity, same risk, same regulatory outcome", tokenised capital markets products falling within the scope of the Securities and Futures Act remain subject to the same regulatory requirements as their conventional counterparts[xiii].
MAS's revised Guide on the Tokenisation of Capital Markets Products[xiv] reinforces this approach by clarifying the application of existing securities laws across the tokenisation lifecycle, including issuance, distribution, trading, settlement and custody. It confirms that regulatory classification depends on the rights and economic substance of the tokenised instrument, while explaining how existing licensing, conduct, disclosure and custody requirements apply to tokenisation activities.
MAS has also pursued a collaborative approach to market development through initiatives such as Project Guardian[xv], which brings together regulators and industry participants to explore the practical application of tokenisation across financial assets and market infrastructure. These initiatives complement the existing legal framework and illustrate how regulatory adaptation can be combined with structured industry collaboration to support the responsible development of tokenised financial markets[xvi].
Japan
Japan has incorporated security tokens within its existing securities framework through targeted amendments to the Financial Instruments and Exchange Act. The amendments brought certain tokenised rights within established securities law categories, including through the introduction of the concept of electronically recorded transferable rights[xvii]. As a result, tokenised instruments remain subject to existing requirements relating to disclosure, licensing, intermediaries and investor protection under the Act.
This legislative framework has been supplemented by industry guidance and self-regulatory standards addressing the practical application of securities regulation to security tokens. Japan Security Token Offering Association (JSTOA) has developed self-regulatory rules and guidance concerning security token offerings, including matters relating to disclosure, distribution and custody[xviii]. The resulting framework reflects the use of targeted legislative reform alongside structured industry standards to incorporate tokenisation within Japan’s existing securities regime without altering its foundations[xix] .
Argentina
Argentina is a particularly interesting example of adapting an existing financial services framework to accommodate tokenisation. In June 2025, the National Securities Commission/Comisión Nacional de Valores (CNV) introduced a framework for the digital representation of certain publicly offered negotiable securities through Resolution General 1069/2025[xx]. The initial regime focused on certain financial trusts and closed-end investment funds whose underlying assets principally comprised real-world assets, providing for their digital representation within the existing capital markets framework. The CNV characterised digital representation as an additional form of representation rather than the creation of a new negotiable security, reflecting a technology-neutral and functionally equivalent approach.
The framework has subsequently evolved. Resolution General 1081/2025[xxi] expanded the regime to include additional negotiable securities, including shares, negotiable obligations and CEDEARs[xxii], while Resolution General 1087/2025[xxiii] further extended tokenisation to certain securities issued under specified automatic public-offering regimes. The entire framework operates within a regulatory sandbox, initially established for one year under Resolution General 1069/2025 and subsequently extended. Following a public consultation initiated under Resolution General 1137/2026[xxiv], the CNV adopted Resolution General 1150/2026[xxv], which expanded the universe of eligible instruments to include all securities issued under any automatic authorisation regime provided in the CNV Rules and extended the sandbox until 31 December 2027, after which the CNV will evaluate whether to extend, modify, expand, reduce or finalise the regime. The progression of the framework illustrates how a regulator can initially adopt a targeted approach to tokenisation and subsequently expand its application as the regulatory framework develops.
Argentina therefore provides an example of regulatory adaptation within an established capital markets framework, with tokenisation addressed through changes to the representation and permitted distribution of existing financial instruments rather than through the creation of a separate regulatory regime for tokenised securities[xxvi]. The use of a regulatory sandbox to test and refine the framework also illustrates the interaction between the regulatory strategies discussed in this article, with Argentina’s approach combining elements of both framework adaptation and structured experimentation.
Synthesis of this category
Read as a whole, these jurisdictions demonstrate that tokenisation can be accommodated within established securities and financial services frameworks by focusing on the legal and economic substance and maintaining the relevant underlying rights or regulatory obligations associated with the applicable products.
Although the specific mechanisms differ, from legislative amendments to supervisory guidance or a combination of various means of regulatory clarification and industry collaboration, the overall approach reflects a shared regulatory technique. In each case, existing law and supervisory expectations are adapted to address tokenisation in a manner that preserves continuity, legal certainty and investor protection.
As these frameworks continue to evolve, meaningful assessment of their practical effectiveness will depend on market experience as tokenisation becomes more widely implemented.
B: Reform of the legal and market infrastructure for tokenisation
While the jurisdictions discussed above have largely accommodated tokenisation within existing regulatory frameworks, others have undertaken broader reforms to the legal and market infrastructure supporting the issuance, transfer, settlement and custody of tokenised assets. These reforms range from amendments to securities settlement and record keeping frameworks to dedicated legal concepts recognising ledger-based rights and regulating digital asset market infrastructure. Their common objective is to align financial market structures with the operational characteristics of distributed ledger technology while preserving securities regulation principles, market integrity and investor protection.
Luxembourg
Luxembourg illustrates the adaptation of securities and market infrastructure frameworks through targeted legislative reforms recognising the use of distributed ledger technology within its securities and investment funds framework. Through a series of blockchain related laws, Luxembourg has progressively amended its financial services legislation to permit the use of distributed ledger technology for the issuance, registration, holding and transfer of financial instruments[xxvii], while preserving the legal character and substantive regulatory treatment of the underlying instruments.
Amendments to Luxembourg’s law on dematerialised securities enable securities accounts to be maintained and securities to be recorded through secure electronic recording mechanisms, including distributed electronic ledgers or databases [xxviii], while preserving the legal effects applicable to conventional dematerialised securities. The framework also extends to the use of DLT based financial instruments as collateral by clarifying that financial instruments registered through such mechanisms fall within the scope of Luxembourg’s financial collateral regime[xxix].
As an EU Member State, Luxembourg’s domestic reforms are complemented by its participation in the EU’s DLT Pilot Regime, which provides a supervised framework for the operation of DLT-based trading and settlement infrastructures[xxx]. Collectively, these reforms illustrate how legislative adaptation can extend beyond the regulation of tokenised instruments themselves to the legal and operational infrastructure supporting their issuance, transfer and settlement, while maintaining continuity with established financial market structures.
Liechtenstein
Liechtenstein has adopted a distinctive legislative framework for tokenisation through the Token and TT Service Providers Act[xxxi] (TVTG), which differs from more targeted adaptations of existing legal and regulatory frameworks by establishing a technology neutral civil law framework for the representation, transfer and enforcement of rights through distributed ledger technology.
The TVTG adopts a Token Container Model, under which a token serves as a digital representation of an underlying right or asset rather than being defined solely by its technological form[xxxii]. The legal character of the token is therefore determined by the nature of the represented right, which may include property rights, membership rights, claims or other absolute or relative rights[xxxiii]. Consequently, where a token represents a financial instrument, the applicable financial market legislation continues to apply, while the TVTG provides the legal infrastructure governing the creation, transfer and enforcement of the tokenised right itself[xxxiv].
To give effect to this framework, the TVTG establishes rules governing the disposal and transfer of tokenised rights through a Trusted Technology (TT) system. It provides that the holder of the relevant TT key is presumed to have the power and right of disposal over the token and, unless otherwise provided by law, disposal of the token results in the disposal of the underlying right it represents. This mechanism provides legal certainty by linking control of the digital representation with the exercise and transfer of the associated legal right, thereby adapting traditional concepts of ownership and transfer to a distributed ledger environment.
Complementing this framework, the TVTG establishes an institutional framework for TT service providers responsible for functions across the lifecycle of tokenised assets, including token issuance, token generation, custody, key management and tokenisation services. These participants are subject to registration and ad hoc supervision[xxxv] by the Liechtenstein Financial Market Authority (FMA), including in relation to applicable due diligence requirements[xxxvi].
Alongside this general framework for tokenised rights, Liechtenstein has also adapted aspects of its securities infrastructure to accommodate the issuance, recording and transfer of securities through electronic and ledger based mechanisms. These measures support the use of distributed ledger technology within regulated financial markets by enabling securities related rights to be recorded and transferred through secure electronic mechanisms while maintaining their legal effects under existing securities law[xxxvii].
Viewed collectively, these reforms demonstrate an approach that extends beyond targeted adaptations of existing legal and regulatory frameworks.
Germany
Germany represents a further example of adapting established securities and market infrastructure frameworks to accommodate tokenisation. The central development is the Electronic Securities Act (eWpG[xxxviii]), which introduced the concept of electronic securities and established a statutory framework for their issuance and administration without the need for paper based certificates. Under the eWpG, securities may be issued either through a central electronic securities register or through a distributed-ledger-based electronic securities register, enabling the issuance of tokenised securities recorded through a DLT based system[xxxix].
The eWpG preserves the legal character of the security itself by recognising electronic securities as legally equivalent to certificated securities. Accordingly, an electronic or DLT based security remains a security within the meaning of existing financial market legislation, with tokenisation affecting the method of issuance, registration and transfer rather than the regulatory classification of the instrument. The Act also establishes the legal effects of registration, the requirements applicable to electronic securities registers, and the responsibilities of register keeping entities, thereby adapting traditional securities concepts to a digital environment.
In 2023, Germany adopted the Future Financing Act (ZuFinG)[xl], which expanded the scope of electronic securities by permitting the issuance of registered shares through distributed-ledger-based electronic securities registers[xli] (with the electronic shares provisions taking effect from November 2025[xlii]). This reform complements the eWpG by extending DLT-based issuance beyond debt instruments and fund units to equity, thereby enabling the issuance of tokenised shares within Germany's existing corporate law and securities law framework.
Complementing these legislative measures, Germany has adapted aspects of its supervisory framework to accommodate DLT based securities infrastructure. Entities operating distributed ledger-based electronic securities registers are subject to regulatory requirements and supervision by the Federal Financial Supervisory Authority (BaFin)[xliii], ensuring that the administration of tokenised securities occurs within a regulated environment. Elements of Germany’s securities infrastructure have also been adjusted to recognise electronic and DLT based securities, allowing tokenised instruments to operate within established frameworks for issuance, registration and transfer.
Considered as a whole, Germany's reforms demonstrate an approach that embeds tokenisation within established securities law and market infrastructure. By recognising electronic and DLT based securities in law, extending DLT based issuance to registered shares, and regulating the entities responsible for their administration, Germany provides the legal and institutional foundations necessary for tokenisation while maintaining continuity with its broader financial market architecture.
The Broader European Regulatory Framework
The domestic reforms adopted by Luxembourg, Liechtenstein[xliv] and Germany operate within a broader European regulatory framework that combines EU level financial‑services legislation with national adaptations of securities and market infrastructure rules. As a general principle, the EU financial services framework regulates financial instruments according to their legal and economic characteristics rather than the technology used to represent them. Where a token represents a transferable security or another financial instrument within the scope of the Markets in Financial Instruments Directive II (MiFID II)[xlv], tokenisation does not alter the regulatory classification of the underlying asset. The applicable financial‑services rules continue to apply, with tokenisation affecting the method by which rights are issued, recorded, transferred and administered rather than the regulatory character of the instrument.
Alongside this framework, the European Union adopted the Markets in Crypto‑Assets Regulation (MiCAR)[xlvi], which establishes a harmonised regime for crypto‑assets and crypto‑asset service providers that fall outside existing financial services legislation. MiCAR does not address questions of property law, ownership or the civil‑law effectiveness of tokenised rights, nor does it apply to crypto‑assets that qualify as financial instruments under existing EU financial services legislation. National reforms such as Luxembourg’s adaptation of securities legislation to permit the use of distributed ledger technology, Liechtenstein’s Token and TT Service Providers Act, and Germany’s Electronic Securities Act therefore continue to provide the legal foundations necessary for the issuance, registration and transfer of tokenised financial instruments.
Together, these measures illustrate the interaction between EU level financial regulation and national legal reforms. While EU legislation establishes the broader regulatory perimeter for financial instruments, market participants and service providers, national frameworks continue to determine many of the legal mechanisms through which tokenised securities are created, recorded and transferred.
Switzerland
Unlike the preceding jurisdictions, Switzerland has developed its tokenisation framework outside the European Union’s harmonised regulatory architecture. Rather than implementing EU frameworks such as MiFID II or MiCAR, Switzerland has pursued targeted domestic reform through the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (the “DLT Act”). This legislative package introduced amendments across private law, financial market and insolvency statutes to recognise ledger-based securities[xlvii] and establish a regulatory framework for DLT-based financial market infrastructure.
A central element of the DLT Act is the introduction of ledger-based securities (Registerwertrechte) into the Swiss Code of Obligations[xlviii]. This reform created a statutory basis for rights to be constituted as ledger based securities recorded in a distributed ledger based securities register, with registration in the ledger providing the legally relevant record of entitlement. Ledger based securities are designed to provide equivalent legal functionality to traditional certificated or uncertificated securities while allowing those rights to be represented and transferred through DLT[xlix]. The statutory requirements governing their creation, transfer and enforceability provide legal recognition for tokenised rights within Switzerland’s private law system.
Complementing these private law reforms, the DLT Act introduced a regulatory framework for DLT trading facilities[l], enabling regulated market infrastructures to facilitate trading in DLT-based securities and certain digital assets. These facilities are subject to licensing and supervision by the Swiss Financial Market Supervisory Authority (FINMA)[li], integrating tokenised instruments into Switzerland’s broader financial-market architecture.
Cumulatively, Switzerland’s reforms represent a targeted and distinct approach to tokenisation, focused on adapting existing private law and financial market infrastructure. By recognising ledger based securities in private law, establishing a regulatory framework for DLT based market infrastructure and clarifying aspects of digital asset treatment in insolvency proceedings, Switzerland has adopted a targeted approach that enables certain rights and obligations to be represented, recorded and transferred through a distributed-ledger-based securities register[lii], integrating tokenised financial instruments within its existing legal and financial‑market framework.
United Arab Emirates
The United Arab Emirates has developed a multi-layered approach to tokenisation, with the most developed frameworks for tokenised financial instruments emerging within its financial free zones, particularly the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). Both jurisdictions have adopted technology neutral approaches that integrate digitally represented financial instruments into existing financial services frameworks while adapting regulatory and market infrastructure to support DLT-based securities.
Abu Dhabi Global Market (ADGM): Within ADGM, the Financial Services Regulatory Authority (FSRA) has developed a regulatory framework for Digital Securities that applies existing securities regulation to securities issued or represented using DLT. Under the FSRA framework, Digital Securities are treated as securities where they exhibit the characteristics of conventional securities[liii].
Tokenisation therefore affects the method through which rights are issued, recorded, transferred and administered but does not alter the legal or regulatory character of the underlying instrument. Activities involving Digital Securities, including issuance, trading, dealing, managing investments and operating market infrastructure, remain subject to the applicable requirements under the ADGM financial services framework[liv].
The FSRA framework adapts securities regulation and market infrastructure requirements to accommodate DLT based representations of financial instruments. It addresses areas including trading venues, custody and settlement arrangements, enabling tokenised securities to operate within a regulated financial-market environment.
Dubai International Financial Centre (DIFC): The DIFC has adopted a comparable approach through the Dubai Financial Services Authority’s (DFSA) Investment Token framework. Investment Tokens are integrated into the existing DIFC financial-services regime, with regulatory requirements applying according to the nature of the underlying rights and the regulated activities performed in relation to them, including issuance, trading, arranging, advising, managing investments and custody[lv].
Unlike Switzerland’s ledger-based securities model, neither ADGM nor DIFC establishes a separate private-law category of rights constituted through registration on a distributed ledger. Instead, both jurisdictions adapt financial-market regulation and infrastructure to facilitate tokenised financial instruments within existing securities frameworks. The UAE therefore illustrates a model of market infrastructure adaptation in which DLT based instruments are integrated into established financial market structures without altering the underlying legal character of the rights represented.
Synthesis of this category
The jurisdictions examined in this category demonstrate that tokenisation requires adaptation beyond the application of existing financial services legislation. While the scope and form of reform vary, the common focus is the legal and institutional infrastructure necessary to support tokenised financial markets, including the mechanisms through which rights are created, recorded, transferred, settled and administered. The approaches sit on a spectrum, from Luxembourg’s targeted amendments to existing securities and market-infrastructure rules, through Germany’s introduction of electronic securities as a new statutory concept, to the creation of dedicated legal frameworks for tokenised rights through Liechtenstein’s Token Container Model and Switzerland’s ledger-based securities.
The approaches also demonstrate that technology neutral regulatory classification can operate alongside technology aware legal infrastructure. While the legal treatment of tokenised instruments may continue to be determined by the nature of the underlying right, jurisdictions may nevertheless develop specific legal mechanisms to address how those rights are represented, recorded, transferred and enforced through distributed ledger technology. This suggests that technology neutral regulatory classification may need to be supported by legal and market infrastructure adapted to the operational characteristics of DLT in order to provide sufficient legal certainty for tokenised financial instruments. The defining feature of this category is therefore not the creation of a single regulatory model, but the development of legal and market infrastructure frameworks capable of integrating distributed ledger technology into established financial market structures while adapting their foundations where necessary.
C: Structured experimentation and market transition
While some jurisdictions have integrated tokenisation within existing regulatory frameworks or undertaken broader legal and market infrastructure reforms, others have used structured experimentation to test how DLT based financial market infrastructure operates in practice and to inform the transition towards wider adoption. These approaches provide mechanisms through which market participants and regulators can assess operational performance, identify risks and evaluate the implications of tokenised infrastructure before or alongside broader market adoption or permanent regulatory change. The forms of experimentation range from statutory pilot regimes to dedicated regulatory sandboxes and regulator coordinated industry programmes. Their common feature is the use of practical experimentation to generate evidence that can inform the evolution of financial market infrastructure, regulatory frameworks and market practice.
European Union DLT Pilot Regime
The European Union's DLT Pilot Regime represents one of the most comprehensive examples of structured experimentation. Established under Regulation (EU) 2022/858[lvi], the Pilot provides a supervised environment in which authorised market infrastructures may operate DLT-based trading and settlement systems for certain financial instruments.
The regime permits authorised entities to operate three categories of DLT market infrastructure[lvii]:
- DLT Multilateral Trading Facilities (DLT MTFs);
- DLT Settlement Systems (DLT SSs); and
- DLT Trading and Settlement Systems (DLT TSSs).
To facilitate experimentation, the Pilot permits targeted exemptions from specific requirements under MiFID II[lviii], MiFIR[lix] and the Central Securities Depositories Regulation (CSDR)[lx], including certain obligations relating to settlement processes and operational requirements. These exemptions are conditional, subject to approval by competent authorities and limited to the scope and duration of the Pilot regime. Operators remain subject to governance, operational‑resilience, investor‑protection and supervisory requirements, ensuring that experimentation occurs within a controlled regulatory perimeter.
ESMA's 2024 and 2025 assessments identified a number of operational and regulatory constraints affecting the Pilot[lxi], including limited participation, the absence of integrated mechanisms for cash settlement, interoperability challenges and uncertainty around the duration of the regime. ESMA recommended adjustments including increased thresholds, removal of the maximum six-year licence duration and an expanded scope of eligible assets[lxii]. These developments illustrate how structured experimentation can generate supervisory evidence that informs subsequent refinement of the regulatory framework.
The evolution of the Pilot also illustrates how structured experimentation can inform both regulatory reform and the development of operational market infrastructure. In December 2025, the European Commission proposed amendments to the Pilot as part of its Market Integration and Supervision Package[lxiii], including expanding the scope of eligible instruments, increasing scale limits, removing the six-year duration cap and introducing a simplified regime for smaller infrastructures[lxiv].
Separately, the Eurosystem has moved beyond a purely exploratory phase in considering how tokenised instruments and DLT based settlement can be integrated into its operational framework. From 30 March 2026, certain marketable assets issued in CSDs using DLT-based services became eligible as collateral for Eurosystem credit operations [lxv], while the Eurosystem is developing Pontes as an operational solution for settling DLT-based transactions in central bank money and Appia as a longer-term initiative for an integrated tokenised financial ecosystem[lxvi]. These developments indicate that tokenised instruments and DLT-based settlement are becoming part of the Eurosystem’s evolving operational architecture, although important elements of that architecture remain under development.
United Kingdom Digital Securities Sandbox and Wholesale Market Transition
The United Kingdom has adopted a structured, regulator supervised approach through the Digital Securities Sandbox (DSS), a statutory mechanism enabling firms to test the issuance, trading and settlement of digital securities on distributed, programmable ledgers within a controlled environment[lxvii]. Established under regulations made pursuant to the Financial Services and Markets Act 2023, the DSS allows participating firms to operate digital securities market infrastructure under a temporarily modified legislative and regulatory framework. The regime provides a framework in which regulators, market participants and the wider digital securities ecosystem can gain practical experience of how tokenised market infrastructure operates, including its operational, market integrity and regulatory implications[lxviii]. Importantly, the DSS was designed as a pathway towards potential permanent reform rather than as an experiment without a defined endpoint: the FCA, Bank of England and HM Treasury have indicated that successful sandbox entrants should be able to transition into any permanent regime introduced following the closure of the DSS, thereby allowing the regulatory framework to evolve alongside practical experience gained through the sandbox[lxix].
The DSS forms part of a broader UK strategy to support the digitalisation of wholesale financial markets. The FCA and Bank of England's 2026 joint vision identifies the DSS as a regulated live environment within a wider set of connected initiatives intended to support the adoption of tokenised securities. These include the Digital Gilt Instrument (DIGIT) pilot for digitally native UK sovereign debt with on-chain settlement[lxx], and related work on stablecoins, tokenised funds[lxxi], settlement infrastructure, digital identity and other components of the wholesale market ecosystem. The authorities' approach therefore envisages tokenisation not as a standalone technology experiment, but as part of a broader evolution of UK wholesale financial market infrastructure[lxxii].
In May 2026, the Financial Conduct Authority and the Bank of England published a joint vision and Call for Input on the future of tokenisation in UK wholesale markets[lxxiii], setting out principles[lxxiv] and an initial roadmap for the adoption and scaling of tokenised financial market infrastructure[lxxv]. The authorities set out a vision for moving towards a digitally enabled wholesale markets ecosystem[lxxvi] including more efficient movement of tokenised collateral, settlement instruments[lxxvii] and the regulatory treatment of tokenised assets[lxxviii].
The transition is also reflected in the government's broader wholesale market strategy. HM Treasury's Wholesale Financial Markets Strategy [lxxix] calls for coordinated action between government, regulators and the sector to drive digitalisation across UK wholesale markets, including through an industry led Digital Markets Champion[lxxx]. The work of the Wholesale Digital Markets Champion and publication of its first report in July 2026[lxxxi] further demonstrate the movement towards coordinated market adoption. further demonstrate the movement from regulatory experimentation towards coordinated market adoption. The report sets out a delivery roadmap for tokenisation, supported by cross industry taskforce groups and focused on the practical implementation of tokenisation across UK wholesale markets.
Together, these initiatives illustrate how the United Kingdom is using structured experimentation alongside broader regulatory and market infrastructure initiatives to inform its longer-term approach to tokenisation. While the DSS and related pilots continue to provide a controlled environment for testing digital market infrastructure, the authorities are also considering the regulatory, settlement and market infrastructure conditions that may be required to support wider adoption.
Dubai Tokenisation Regulatory Sandbox
The Dubai Financial Services Authority (DFSA) introduced a dedicated Tokenisation Regulatory Sandbox in 2025 to facilitate supervised experimentation with tokenised investment products and assets and to inform the DFSA about relevant business models, products and services. The initiative forms part of the DFSA's Innovation Testing Licence (ITL) programme. The sandbox covers activities including the issuance, trading, holding and settlement of tokenised investments such as equities, bonds, sukuk, collective investment fund units and real-world assets[lxxxii].
The initiative is structured as a pathway from experimentation towards wider authorisation. Following an initial expression-of-interest process, selected firms may enter the ITL Tokenisation Cohort and conduct live market testing subject to tailored testing parameters, regulatory modifications and close DFSA supervision. During the testing phase, certain prudential, capital and other regulatory requirements may be waived or modified, providing firms with a controlled environment in which to test their business models[lxxxiii].
The DFSA received 96 expressions of interest for its inaugural tokenisation sandbox, with selected firms subsequently progressing to the ITL Tokenisation Cohort for live testing[lxxxiv]. The DFSA has indicated that the outcomes of the testing will help inform future regulatory policy and potential refinements to its digital asset and broader innovation frameworks[lxxxv].
The sandbox therefore complements, rather than replaces, the DIFC's broader regulatory framework for digital assets and investment tokens. Its significance within the present category lies in its use of controlled experimentation to generate practical experience with tokenised financial products and services before wider deployment.
Singapore Project Guardian
Singapore has adopted a different form of structured experimentation through Project Guardian, a collaborative initiative led by the Monetary Authority of Singapore (MAS). Unlike the EU DLT Pilot Regime, UK Digital Securities Sandbox and Dubai Tokenisation Regulatory Sandbox, Project Guardian is not principally a statutory sandbox providing temporary exemptions from existing financial market legislation. It provides an industry led and regulator coordinated environment in which financial institutions, market infrastructure providers and technology firms can conduct practical pilots involving asset tokenisation and interoperable digital asset networks[lxxxvi]. MAS uses the initiative to develop practical understanding of how tokenised financial assets and distributed ledger infrastructure could operate within, and inform the development of, future financial market infrastructure[lxxxvii].
Project Guardian has instead focused on testing the operational and infrastructure models that may underpin future market adoption. Its pilots have examined tokenised bonds and other fixed-income instruments, funds and wealth-management products, foreign exchange, tokenised deposits and portfolio management, among other applications of tokenisation. The initiative has also explored open and interoperable networks, trust anchors, asset tokenisation and institutional-grade financial protocols, alongside the governance, risk-management and interoperability considerations relevant to institutional adoption[lxxxviii].
A 2023 Project Guardian proof of concept by J.P. Morgan, through Onyx (since rebranded as Kinexys) and in collaboration with Apollo, tested how tokenisation and smart contracts could support investment portfolios holding tokenised traditional and alternative assets across blockchain networks. It demonstrated standardised subscription and redemption, automated rebalancing, portfolio customisation at scale and cross-chain interoperability through permissioned infrastructure[lxxxix].
Project Guardian therefore represents a complementary model to the EU, UK and Dubai approaches[xc]. Rather than modifying the legal perimeter principally to permit experimentation, it uses regulator-coordinated industry pilots to explore how tokenised financial-market infrastructure could function and scale within the existing institutional and regulatory ecosystem.
Synthesis of this category
The models reflect different approaches: the EU DLT Pilot Regime relies on statutory exemptions from specified requirements, the UK’s Digital Securities Sandbox provides a pathway from supervised experimentation towards a potential permanent regime, and Singapore’s Project Guardian uses industry collaboration coordinated by the regulator without relying primarily on temporary statutory exemptions. Each model reflects a different theory of how regulatory learning occurs and how the transition from experimentation to permanent adoption should be managed. Taken together, these approaches demonstrate the importance of creating a controlled basis for testing, evaluating and refining the regulatory and market infrastructure needed to support the wider adoption of tokenised financial instruments.
Conclusion
Tokenisation is being integrated into financial markets through a range of regulatory strategies, each shaped by domestic legal traditions, market structures and supervisory priorities. Some jurisdictions have adapted existing financial services frameworks, applying established legal concepts to digitally represented interests and introducing targeted reforms where necessary. Others have undertaken broader reforms to the legal and market infrastructure foundations that support issuance, transfer and settlement. A third approach has been the use of structured experimentation to test how tokenised market infrastructure operates in practice and to inform future regulatory development.
In aggregate, these approaches illustrate that there is no single regulatory pathway for tokenisation. Instead, jurisdictions are aligning regulatory treatment and market infrastructure design having regard to the operational characteristics of distributed ledger based systems.
Across these different approaches, regulators are seeking to provide greater legal certainty while addressing the implications of tokenisation for settlement and post-trade processes, market access and operational resilience. They also seek to support interoperability between tokenised and conventional market infrastructure and to preserve technological neutrality, allowing regulatory frameworks to evolve alongside the technology as practical experience develops.
Among the questions that these regulatory approaches raise are the substantive treatment of investor protection, the cross-border recognition and interoperability of tokenised instruments, and the conflict-of-laws implications of novel legal constructs. Many remain at an early stage of development and will benefit from further examination as market experience deepens. This article has focused on jurisdictions that have adopted targeted regulatory reforms for tokenisation; other major markets remain at earlier stages of regulatory development in this area.
The next article in this series will examine the areas that remain open as tokenised financial markets continue to develop, and how those questions may shape the evolution of regulatory frameworks and market infrastructure design.
References
[i] These approaches are not mutually exclusive; jurisdictions may employ more than one strategy, either concurrently or as their regulatory frameworks evolve.
[ii] A number of jurisdictions are discussed herein. Note that because the United States has not yet adopted targeted legislative or regulatory reforms for the tokenisation of financial instruments, comparable to those examined in this article, a discussion on same has not been included, though it is noted that regulatory discussion in this area is ongoing.
[iii] See here.
[iv] See here.
[vi] The amendments introduce definitions of digital equity tokens and digital investment tokens and address matters including recordkeeping, transferability, disclosure of technology-specific risks, and CIMA's supervisory and inspection powers in relation to token transactions and the underlying technology.
[x] See HKMA circular, "Updated Guidance on Provision of Custodial Services for Digital Assets" (27 May 2026), https://brdr.hkma.gov.hk/eng/doc-ldg/docId/getPdf/20260527-6-EN/20260527-6-EN.pdf , which supersedes the HKMA's earlier circular of 20 February 2024 on the same subject.
[xxii] An Argentine Certificate of Deposit/Depositary Receipt-a financial instrument issued in Argentina that allows investors to access foreign assets that are not listed on the local market.
[xxvi] Argentina's approach forms part of a broader regional trend. In Brazil, CVM Resolution No. 29 of 2021 established a regulatory sandbox within which a project for the digital representation of negotiable securities was implemented, presenting certain similarities with the Argentine regime. In Uruguay, Law No. 20,345 of 2024 authorises issuers, with the prior approval of the Central Bank of Uruguay, to issue decentralised book-entry securities through distributed ledger technology. See the recitals to CNV Resolution General 1069/2025, which reference both frameworks as regional precedents.
[xxxi] https://www.regierung.li/files/medienarchiv/950-6-01-09-2021-en.pdf
[xxxii] To that end ‘token’ under the TVTG is defined as “a piece of information on a TT System which: 1. can represent claims or rights of memberships against a person, rights to property or other absolute or relative rights; and 2. is assigned to one or more TT Identifiers”
[xxxiii] The TVTG reinforces this relationship through a regulated ecosystem of Trusted Technology (TT) service providers, including token issuers, TT key custodians, token generators and TT protectors. A distinctive feature is the physical validator, who is responsible for ensuring that rights represented by a token remain legally enforceable against the underlying asset or legal relationship, thereby maintaining the connection between the digital representation and the off-chain right.
[xxxv] Unlike traditional financial intermediaries, TT service providers are not subject to ongoing supervision by the FMA. The FMA only takes supervisory action based on the ad hoc reporting system provided for in the TVTG or upon receiving a third-party notification.
[xxxix] The eWpG employs the statutory terms Kryptowertpapier ("crypto security") and Kryptowertpapierregister ("crypto securities register") for securities and registers maintained using distributed ledger technology. To maintain terminological consistency and to distinguish tokenised securities from crypto-assets, this article instead uses the broader expressions "tokenised securities" and "distributed-ledger-based electronic securities register", except where reference to the statutory terminology is required.
[xliii] See here and here.
[xliv] Liechtenstein is a member of the European Economic Area (EEA) but not the European Union. EU financial services legislation, including MiFID II and MiCAR, applies to Liechtenstein through incorporation into the EEA Agreement rather than by direct effect.
[xlv] See here.
[xlix] See helpful article here by Dr. Daniel Flühmann & Sarah Vettiger.
[l] See comprehensive analysis here
[liii] such as shares, debentures or units in collective investment funds.
[lvi] See here.
[lviii] Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p.349).
[lix] Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p.84).
[lx] Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p.1).
[lxii] Ibid.
[lxvi] See here and here.
[lxviii] See here and here.
[lxix] Ibid.
[lxx] DIGIT is designed to be digitally native, issued on a platform operating within the DSS and settled on-chain, bringing together digital market infrastructure, on-chain settlement, regulation and related financial-market considerations in a controlled environment.
[lxxiii] See here.
[lxxiv] See FCA/Bank of England, Call for Input: The future of tokenisation, Chapter 3, “Principles for regulation and infrastructure”, pp. 12–15. The proposed principles include clear accountability for regulated activities, maintenance of operational resilience and market integrity, protection of client interests, clear ownership records and settlement finality, and minimisation of liquidity fragmentation and interoperability barriers.
[lxxvi] Call for Input pg. 9: “Our vision is for a digitally enabled wholesale markets ecosystem in which……. Tokenised securities, cash and collateral move more efficiently across the trade lifecycle, helping improve issuance, trading, clearing, settlement and post-trade processes. This is delivered in an ecosystem that is efficient, safe and resilient and anchored in central bank money settlement”
[lxxvii] Regulating the issuance and settlement of digital securities- see pg. 6 Ibid.
[lxxviii] Prudential Treatment of tokenised assets- see pg. 7 Ibid.
[lxxix] Wholesale Financial Markets Digital Strategy: “The ‘tokenisation’ of assets could deliver a step change in market efficiency, for instance by enabling real-time data sharing which could improve transparency and lower operational costs. More broadly, it could enable a fundamental reimagining of the way financial markets operate, creating infrastructures that support both existing and new forms of asset issuance, transfer and ownership”.
[lxxxi] See here.
[lxxxii] See Guide here.
[lxxxiii] See pg 4 DFSA’s Tokenisation Regulatory Sandbox: “By waiving or modifying certain prudential, capital, and other relevant requirements during this “testing” phase, the DFSA ITL Tokenisation Cohort programme aims to: facilitate firms’ entry into the market to test their innovation and subsequent scaling of business in the DIFC; and encourage responsible innovation in the DIFC whilst maintaining confidence in the financial services market and regulatory integrity.”
[lxxxiv] Note per DFSA website : “Some firms were invited into the sandbox for live testing under the Innovation Testing Licence, while others were considered suitable for full authorisation under existing rules due to the maturity of their operations and experience in other regulated jurisdictions.”
[lxxxvi] Project Guardian pg. 9: “Project Guardian aims to advance the development of efficient and safe financial networks. The industry pilots conducted under the initiatives support the following objectives: (i) Improve understanding of the opportunities and risks of digital assets and assess longer-term transformational impact. (ii) Enable interoperability across different platforms, use cases, and amongst participating entities. (iii) Define standards and best practices for risk management and operational execution.”
[lxxxix] See Report on Kinexys.
[xc] The pilots allow financial institutions and technology providers to test commercially relevant use cases and infrastructure models, while MAS gains practical insight into the operational, governance, risk-management and interoperability issues that may need to be addressed as tokenised markets develop.