How can tokenisation make capital markets more accessible to European SMEs?
For many small and medium-sized enterprises (SMEs) across Europe, the cost and complexity of issuing a bond are disproportionate to the amount they need to raise. Tokenisation can bring issuance, registration, custody, settlement, and lifecycle management onto more connected infrastructure, reducing operational handoffs and supporting smaller denominations.
Distribution is also a key factor, as a bond may be transferable on paper but remains effectively illiquid when it is confined to one platform’s investor base. Connecting these crowdfunding platforms, brokers, and other regulated distributors to a shared venue can give suitable SME bonds a broader route to investors and secondary trading.
We have seen this first hand through our partnership with Profitus, a European crowdfunding platform. Our work with Profitus kicked off earlier this year, with the aim to bring digital corporate bonds to everyday investors through our simplified, blockchain-based platform.
This approach lowered the usual barriers to investing in bonds by offering a much lower minimum entry of €500 as opposed to the usual €1,000 or more.
In total, the first issuance raised €3.4 million, 38 per cent more than was expected. The issuer aimed to secure this amount in 30 days but stopped the process at this oversubscribed rate after just a week, demonstrating the market’s appetite for products like this.
It is important to note that tokenisation doesn’t improve an issuer’s credit quality or necessarily guarantee demand. Its value is in making capital market access more efficient and open to issuers that have traditionally relied heavily on bank financing.
What role could tokenised money market funds play in helping regulated institutions diversify and manage short-term liquidity?
Tokenised money market funds (MMFs) could give regulated financial institutions an additional option for managing short-term balances, alongside traditional bank deposits and other cash-management arrangements. This could support greater diversification in how liquidity is managed, subject to the institution’s regulatory, safeguarding, and risk requirements.
This is particularly relevant for electronic money institutions (EMIs), many of which need safeguarded client funds returned to their accounts by end of the business day, while conventional MMF settlement can extend beyond that window.
Same-day settlement of tokenised MMF units can better align the investment and redemption cycle with those operational requirements.
The underlying instrument remains a regulated MMF, while tokenisation can make access, transfer, and settlement more efficient.
Over time, this could help institutions avoid relying too heavily on a single form of short-term cash management, while keeping liquidity accessible when required.
The wider benefit will depend on tokenised MMFs connecting with existing payment, custody, and settlement infrastructure, rather than remaining confined to isolated platforms.
What do Lloyds Banking Group’s recent tokenised deposit transactions tell us about the potential for programmable commercial bank money and delivery-versus-payment?
Lloyds live transactions demonstrate that regulated commercial bank money can operate within programmable workflows, linking foreign exchange, payment, and settlement in a way that can reduce friction and settlement risk.
While tokenised deposits address the money side of a transaction, they do not yet connect seamlessly with regulated venues, securities ledgers, and settlement infrastructure, meaning the cash and asset legs cannot yet move together across different infrastructures at market-wide scale
This is particularly important in Europe, where markets remain fragmented across national systems and jurisdictions. Without common standards and cross-border interoperability, the industry risks reproducing today’s fragmented processes in digital form rather than enabling coordinated delivery-versus-payment (DvP) across the transaction lifecycle.
Tokenised securities will not scale if the money and asset infrastructure develop separately.
What has the EU DLT Pilot Regime achieved so far, and what needs to change to encourage greater adoption?
The Pilot Regime has given Europe a regulated route for combining distributed ledger technology (DLT)-based multilateral trading facility (MTF) and securities depository.
In our case, it has enabled us to operate an integrated DLT trading and settlement system and subsequently bring digital bond issuance and secondary trading into operation. This is an important achievement, moving regulated tokenisation into real market infrastructure.
However, while the framework provides a very strong starting point, this isn’t where the path ends.
Regulators should move quickly to ensure the regime becomes permanent, supporting a broader spectrum of financial instruments and removing artificial capacity constraints.
Europe risks losing infrastructure, expertise, and, ultimately, future liquidity if firms must wait through another lengthy review cycle before they can scale.
What is needed to achieve interoperability between different DLT networks and existing financial market infrastructure?
Global finance does not need all its institutions operating on a single ledger, but it does need regulated systems to be able to operate in parallel, exchanging assets, settlement instructions, and data without requiring participants to rebuild their infrastructure for each network.
This requires common technical standards and reliable connections across the full trade lifecycle.
Firstly, we need legal interoperability as participants must know which record establishes ownership, when a transaction becomes legally final, how conflicts between different records are resolved, and what happens in an insolvency.
Secondly, there must be interoperability between the cash and securities legs.
A digital security needs to connect with central bank money, tokenised commercial bank deposits, or another regulated settlement asset. Those two legs must be synchronised to achieve genuine DvP.
Thirdly, the market needs common data and messaging standards that are understandable across networks. Project Agorá’s real-value testing interacted with external payment and core-banking processes through established ISO 20022 messaging, demonstrating how new infrastructure can reuse existing standards rather than requiring every institution to replace its systems at once.
Finally, interoperability requires governance, as an ungoverned technical bridge could simply replace today’s operational handoffs with a new concentration of technology and third-party risk.
The Eurosystem’s Pontes initiative is an important practical development, with its initial launch planned for Q3 2026. It is designed to link eligible DLT market platforms with TARGET services to support settlement of DLT-based wholesale transactions in central bank money.
Our own infrastructure reflects this multi-network approach. It operates on a private, permissioned network based on XRP ledger technology, while our Canton validator provides an additional institutional rail.
This gives us experience of operating across different institutional technologies, rather than relying on a single network model.
What is holding back secondary market liquidity for tokenised bonds and what needs to change?
The main issue is fragmentation. Issuance has developed faster than secondary trading, which leaves many digital securities in closed environments or bilateral arrangements.
An instrument may be transferable, but technical transferability does not necessarily create genuine liquidity when investors cannot move it across platforms or access counterparties through their existing broker.
The market needs more brokers and regulated distributors connected to shared venues, more instruments available for trading, and more repeat participation from issuers and investors, alongside infrastructure that provides consistent execution and settlement through a single integration. This creates a chicken-and-egg problem as all sides hesitate to be the first movers.
Our first live secondary market trade demonstrated that the end-to-end process can work. The objective now is to broaden our participation so that instruments are not confined to the environment in which they were originally distributed.
Could the EU’s Savings and Investments Union and tokenisation make it easier for investors to access securities across European borders?
Yes, it could, but only if policy reform and infrastructure development advance together. Europe has developed a common capital markets rulebook without creating a single market. It is still incredibly difficult for an investor using an intermediary in one member state to access an SME bond issued through a platform in another.
The Savings and Investments Union (SIU) can address the legal, supervisory, and market-access barriers.
Tokenisation can then address part of the operational problem by allowing authorised platforms, brokers, and venues to interact with the same instruments through connected infrastructure.
As mentioned previously, tokenisation is not a solution to fragmentation by itself.
If national systems and new DLT networks remain disconnected, Europe will simply recreate its existing silos in digital form.
The objective should be a regulated market in which investors can access suitable cross-border securities through their existing financial intermediaries — which Europe has not yet achieved.
Where does Axiology fit within the developing tokenised capital markets ecosystem, and what needs to happen for the market to reach scale?
We combine a MiFID investment-firm licence with authorisation to operate a DLT trading and settlement system, connecting issuance, custody, trading, and settlement for digital securities. Our purpose is not to remove every intermediary but rather to reduce unnecessary integrations and operational handoffs between them.
To date, more than €209 million worth of equity has been issued through our platform across 95 live share instruments.
Our products and services have earned multiple industry awards, most recently with our digital asset exchange being recognised among the leading emerging players in the market.
As active participants within it, we believe the market will reach scale through repeat issuance, broader broker and distributor participation, interoperable settlement money, common standards, sustainable economics for issuers and intermediaries, and a permanent, workable regulatory framework.
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