DLT Legal Frameworks for Tokenized Securities
National DLT legal frameworks enabling tokenized securities: Swiss DLT Act, Liechtenstein Token Act (TVTG), Luxembourg blockchain law, Germany eWpG, and EU DLT Pilot Regime — legal certainty for tokenized asset issuance.
DLT Legal Frameworks: The Legal Infrastructure for Tokenized Securities
The tokenized securities market depends on a foundational legal question: when a security is represented as a token on a distributed ledger, does the token holder actually own the security? The answer varies by jurisdiction — and the jurisdictions that have enacted DLT-specific legislation to provide a clear “yes” are the same jurisdictions attracting the most institutional tokenization activity.
This section examines the national legislative frameworks that provide legal certainty for tokenized securities — including Switzerland’s DLT Act (2021), Liechtenstein’s Token Act/TVTG (2020), Luxembourg’s blockchain-enabled securities legislation (2021), Germany’s Electronic Securities Act/eWpG (2021), and the EU’s DLT Pilot Regime (2023).
Each framework is assessed across five dimensions: scope (which asset classes can be tokenized), legal certainty (transfer mechanism, ownership rights), infrastructure requirements (CSD role, DLT trading facility), investor eligibility (retail vs. institutional), and practical uptake (issuances to date, platform adoption).
For compliance officers and legal counsel structuring tokenized issuances, these are the frameworks that define what is legally possible — and legally certain — in each jurisdiction.
EU DLT Pilot Regime: Testing Tokenized Securities Infrastructure
The EU DLT Pilot Regime (Regulation 2022/858, effective March 2023) allows trading venues and CSDs to operate DLT-based securities infrastructure with regulatory exemptions for up to 6 years, testing the viability of on-chain settlement for EU securities.
Germany eWpG: Electronic Securities Act and Crypto Securities Registry
Germany's Electronic Securities Act (eWpG), in force since June 2021, enables the issuance of electronic bonds and fund units without paper certificates. Crypto securities (Kryptowertpapiere) can be registered in a decentralized DLT-based registry authorized by BaFin.
Liechtenstein Token Act (TVTG): The World's First Comprehensive Token Law
Liechtenstein's Tokens and Trustworthy Technology Service Providers Act (TVTG) — in force January 2020 — was the world's first comprehensive law governing tokens and blockchain, covering token rights, TT service provider licensing, and all property represented on DLT.
Luxembourg Blockchain Law: DLT Securities Settlement and Fund Tokenization
Luxembourg's blockchain legislation — the 2019 Blockchain Law I and 2021 Blockchain Law II — enabled DLT-based settlement for securities and fund unit registration. Luxembourg is the EU's leading fund domicile and its blockchain laws enable tokenized UCITS and AIF structures.
Swiss DLT Act 2021: DLT Trading Facilities and Ledger-Based Securities
Switzerland's DLT Act — effective August 2021 — created the world's first DLT Trading Facility license and introduced ledger-based securities (Registerwertrechte) as a new category of Swiss law securities enforceable on-chain.