Navigating the European Regulatory Landscape: 21X and the DLT Pilot Regime

The European regulatory environment for digital assets is evolving rapidly, and 21X finds itself at the forefront of this change. As we pursue our DLT trading and settlement system (DLT TSS) license under the EU’s DLT Pilot Regime, several factors will shape their journey.

Positive environment

21X is operating in a region in which the EU has taken a positive stance towards blockchain innovation.

The introduction of the DLT Pilot Regime demonstrates a willingness to explore the potential of this technology while mitigating risks. This framework provides a clear set of principles for 21X to operate under through a defined regulatory umbrella.

While the DLT Pilot Regime offers a supportive environment, there are still considerations 21X must navigate:

Compliance with ESMA Regulations

The European Securities and Markets Authority (ESMA) plays a crucial role in overseeing the DLT Pilot Regime. 21X will need to demonstrate strict adherence to ESMA’s regulations regarding anti-money laundering (AML), know-your-customer (KYC), and investor protection.

Focus on Security and Transparency

Building trust with regulators and potential users is paramount. 21X’s DLT infrastructure must prioritize robust security measures and ensure complete transparency in its operations.

Adaptability in a Dynamic Landscape

The regulatory landscape for digital assets is constantly evolving. 21X will need to be adaptable and responsive to any changes or clarifications issued by ESMA or other relevant authorities.

Fostering Innovation

ESMA's approach to digital assets is multifaceted.

The DLT Pilot Regime is just one – though vital – aspect of its strategy as it helps Europe to remain competitive in the world of capital markets. It is also undertaking a number of other initiatives which will further the European digital asset ecosystem.

Regulatory sandboxes

These sandboxes allow innovative companies, including 21X, to test their DLT-based solutions in a controlled environment with regulatory oversight

Guidance and reports

ESMA actively issues guidance and reports on digital assets, providing clarity and fostering a more predictable regulatory environment for businesses

Collaboration with industry players

ESMA actively engages with industry stakeholders to understand the challenges and opportunities presented by digital assets. This collaborative approach helps shape future regulations that are both innovative and responsible

The European regulatory landscape, while still evolving, offers a supportive environment for 21X’s ambitions. By demonstrating robust compliance, prioritizing security, and remaining adaptable, 21X is well-positioned to secure its DLT TSS license and contribute to Europe’s position as a leader in the digital asset trading space.

Our technology offering

Technology deep dive

21X will be a licensed trading and settlement system for DLT FI that is using a central limit order book model implemented by smart contracts on the blockchain that are connected and supported by off-chain components to facilitate compliance and integrations. The following sections provide an overview of the system, explain the rationale for important architectural decisions and introduce important parts of the system from a technological perspective.

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