21X, a Frankfurt-based company building a blockchain-based exchange to list and trade tokenized securities, has received approval to go live from Germany's financial supervisory authority, BaFin.

The 21X exchange, which runs on the scalable Polygon chain, plans to launch its exchange for tokenized financial instruments from its Frankfurt headquarters in the first quarter of 2025, the company said on Tuesday.

The plan is to trade tokenized equity, debt securities, funds, as well as more exotic real-world assets (RWAs) such as real estate or artworks that qualify as eligible financial instruments.

Tokenization has become popular among traditional finance firms, with the likes of asset manager BlackRock now driving the trend. From a regulatory perspective, Europe is on the verge of welcoming a new regime for crypto assets, the Markets in Crypto Assets (MiCA) regulation, the next phase of which is set to start at the end of this year.

The 21X license has been issued under the EU’s DLT Pilot Regime (DLTR), and is the result of an 18-month process that involved BaFin, the German Federal Bank (Deutsche Bundesbank), the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB), 21X said in a press release.

“This is more than just a license – it’s a revolutionary moment for capital markets,” said Max Heinzle, CEO of 21X in a statement. “For the first time ever institutional and retail investors can trade and settle tokenized securities on a fully regulated, blockchain-based exchange with the same level of trust, security and compliance as traditional markets.”

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