DNB and AFM call for Dutch law reform to enable native digital securities
Key points
- DNB and AFM have published a paper concluding that Dutch law does not currently support natively digital securities issuance, though tokenisation under existing structures is possible.
- Germany, Luxembourg, and France have already amended their national laws to recognise distributed ledgers as legally valid records of securities ownership, giving those jurisdictions a structural edge.
- The EU DLT Pilot Regime exempts venues from certain market infrastructure rules but leaves the legal status of tokens to national law, forcing Dutch venues to issue under another member state's framework via passporting.
- The European Commission's proposed 28th regime, put forward in March, is identified as a potential long-term fix, but the Dutch regulators caution it could merely add complexity unless it is designed comprehensively.
- DNB and AFM note that both EU and national frameworks are framed as technology-neutral but implicitly assume traditional infrastructure design, a tension that natively digital issuance exposes directly.
De Nederlandsche Bank (DNB) and the Authority for the Financial Markets (AFM) have jointly published a paper arguing that Dutch law must be amended to support natively digital securities. Under the current framework, tokenisation is possible but digitally native issuance is not, leaving Dutch venues in a structurally disadvantaged position relative to peers in Germany, Luxembourg, and France, all of which have already amended their laws to recognise a distributed ledger as a legally valid record of securities ownership.
The European Union’s DLT (Distributed Ledger Technology) Pilot Regime does not resolve the gap. Although it grants exemptions from certain market infrastructure rules, the legal status of a token remains a matter of national law. The practical consequence is that a Dutch DLT venue seeking to issue natively digital securities must do so under another member state’s legal framework, relying on passporting rules for securities depositories rather than domestic authority.
For a longer-term structural fix, the regulators point to the European Commission’s proposed 28th regime, an optional pan-European corporate framework floated in March, which covers corporate securities issuance. DNB and AFM are cautious, however, warning that unless the regime is comprehensive it risks adding another legal layer rather than resolving the underlying fragmentation. Their paper also observes that EU and national frameworks are, in principle, technology-neutral but implicitly assume traditional financial market infrastructure design, a structural assumption that natively digital issuance directly challenges.
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