Finance Tokenization: the Italian Experience

Abstract

This paper examines the various steps taken toward the tokenization of finance, made possible by distributed ledger technology (DLT), in the European and national contexts. In a context favourable to innovation and the use of enabling technologies, as outlined in the EU Strategy for Digital Finance, the European Commission is taking action on two complementary fronts that leverage the benefits of DLT: one focused on crypto-asset markets (MICA Regulation), the other relating to crypto-assets that qualify as financial instruments (Pilot Regime Regulation). The adoption of the sandbox model allows for the testing of DLT at both European and national level, where the adoption of the so-called FinTech Decree goes beyond the scope outlined by the EU Regulation to establish a legislative framework supporting the issuing and circulation of financial instruments in digital form via distributed ledger technologies. Despite the first instances of use and experiences in Italy, the current situation reveals a market still in the exploratory phase, hampered by the temporary nature typical of experimentation, but above all awaiting European action to establish a lasting framework for DLT.