The state of DLT adoption in European TradFi

Earlier this year, we attended the Network Forum in Paris, a gathering from the finance community with custody, settlement and post-trade industry actors. An interesting signal for us, was that digital assets and Distributed Ledger Technology (DLT) use cases were on the agenda this year. 

An organizer’s poll revealed that, among the 120 participating companies, over half of them had a DLT project live or in POC stage. However, 69% of them also cite the lack of client demand as the main barrier to developing them.

As a reminder, DLT offers a shared database infrastructure, often decentralized, where institutions can record and confirm the same transaction on one common ledger at the same time, instead of each institution logging it separately and matching records afterward. Blockchain is the best-known version of this technology.

For many companies in the digital asset ecosystem, there is a shared idea that traditional finance is now close to embracing DLT-based use cases. Reports frequently state that we are seeing projects move from pilot to production, and that banks, brokers, custodians and post-trade infrastructures are racing to not miss the market opportunities. While this is also our conviction at Tangany, we know that there is a bit of nuance to it. DLT-based infrastructure may still come to occupy an important place in the financial sector, but this is a gradual shift that still requires the regulatory and technical status quo to evolve. 

In this piece, we explore the state of DLT in finance and share our thoughts on market development.

DLT-based use cases in Traditional Finance

In this first section, we look at DLT-based use cases, where their value lies for traditional actors and examples of live projects. We typically observe four categories of applications on the market: 

• Crypto asset trading

• Real-world asset (RWA) tokenization

• Financial market infrastructure

• Payment and settlement (with stablecoins)

Crypto asset trading

Our first category sees banks and brokers offering direct crypto trading to clients, either as a new product line or alongside existing brokerage services. This is primarily a revenue move to capture a share of an existing market. It allows traditional players to build new revenue streams from transaction fees while nurturing client relationships with a service that many users are already accessing elsewhere. This category also extends to private wealth, with banks giving high-net-worth clients access to crypto. UBS, for instance, rolled out Bitcoin and Ethereum trading to Swiss private banking clients earlier this year.

The market potential is quite large. In Europe, Paybis estimates approximately 100 million crypto users in 2026. Several European financial institutions are moving to meet this market, launching crypto trading alongside their existing retail brokerage or banking products: BBVA in Spain, KBC in Belgium, digital banks such as Revolut and N26, and Germany's two
largest retail banking groups (the Sparkassen and the cooperative banks led by DZ Bank) targeting summer 2026.

It’s interesting to note here that we also see a similar motion from crypto native exchanges, with players like Bitpanda and Coinbase offering financial products (stocks, ETFs, etc) from traditional finance. 

Asset tokenization

Asset tokenization is the use case attracting the most institutional attention. By representing traditional financial instruments (bonds, funds, equities, real estate) as digital tokens on a DLT network, companies are expected to benefit from faster settlement, fractional ownership, automated compliance, and broader investor access. 

In Germany, this is already operational: the 2021 eWpG created the "crypto security," a fully digital, on-chain instrument recognized as a security in its own right. Companies have already issued tokens under this framework. Recently, COMETUM Capital, a private markets investment manager, issued a €4 million electronic security on it, giving investors exposure to SpaceX pre-IPO shares.

In Europe, issuers have placed close to €4 billion in DLT-based fixed-income instruments since 2021, per the ECB/AFME, including issuances by the European Investment Bank and France's
Caisse des Dépôts. Germany's KfW, one of Europe's largest bond issuers, announced its third DLT-based bond in June 2026, deliberately designed to stress-test infrastructure resilience.

Financial market infrastructure

Another DLT application is the rebuilding of financial market infrastructure (i.e. clearing, settlement, custody, collateral management) on distributed ledgers.The value is real-time settlement, reduced counterparty risk, and lower operational cost. 

In Europe, this layer is still being built. The ECB's Pontes initiative, scheduled to go live in Q3
2026, will for the first time enable settlement of tokenized transactions in central bank money. Six DLT-based trading and settlement infrastructures are currently authorized under the EU's DLT Pilot Regime, spanning the Czech Republic, Germany, Lithuania, France, and Spain, with three of the six authorized in the second half of 2025 alone.

Payment and settlement

Finally, we see DLT-based payment and settlement taking off where companies use fiat-backed digital tokens (e.g. tokenized deposits or stablecoins) to move money 24/7 across borders and between institutions, bypassing traditional correspondent banking rails. The value is instant settlement, reduced pre-funding, and lower costs on cross-border flows.

In Europe, the infrastructure is taking shape. A consortium that grew from 12 to 37 European banks between February and May 2026, is preparing to launch Qivalis, a MiCA-compliant euro stablecoin, in the second half of 2026. Deutsche Bank has demonstrated live euro-denominated cross-border settlement via Partior.

Driving forces and challenges

Several aspects are converging to make institutional DLT adoption more viable than it was two or three years ago. Two of these matter most: the regulatory foundation and cost predictability. Three constraints, though, still sit between a live project and a client-facing product.

Regulatory unity, cost predictability and infrastructure maturity 

First of all, the regulatory foundation in Europe is now mostly in place. MiCA is in force. The DLT Pilot Regime is operational. The ECB, Bank of England, and EU Commission have all signaled long-term commitment to DLT-based financial market infrastructure. Regulatory uncertainty, historically the primary institutional objection, has meaningfully reduced. At the Network Forum, only 7% of respondents cited regulation as the major remaining blocker to DLT adoption. The legal framework exists but whether it's calibrated for commercial scale is a separate question, one we return to below.

Costs have also become more predictable. A BCG/Ripple report, "Approaching
the Tokenization Tipping Point", puts a single use case entry point at under $2 million, which has shifted the build-versus-wait calculus for institutions evaluating first projects.

At the infrastructure layer, the market has matured past the pilot stage. JPMorgan's Kinexys platform has processed over $1.5 trillion in tokenized transactions since launch, with daily volumes exceeding $2 billion, evidence that DLT-based settlement now runs at genuine institutional scale rather than in sandboxes. The report also points to fintech M&A: banks and major institutions acquiring platforms and startups outright, as one driver accelerating this shift, alongside a broader move from private to permissioned-public blockchains at firms like Société Générale and Citi.

Barriers to adoption

Some constraints still stand in the way of institutional DLT adoption, among them licensing gaps, regulatory design and market and liquidity issues.

The first is the gap between licensing and market presence. Of 324 MiCA CASPs authorized as of early August 2026, 47 only are traditional financial institutions, and Germany accounts for 28 of them, roughly 80%. France has licensed three bank-affiliated CASPs: Société Générale's own crypto subsidiary, the private bank Banque Delubac, and the public investment arm Bpifrance. Most EU member states have no TradFi CASP presence at all. 

Digital securities regulation isn't completely unified either: Germany's crypto security framework sits outside MiCA's scope entirely, since it's classified under MiFID II rather than as a crypto-asset, and while other EU states are drafting comparable regimes, none of them are harmonized with each other, adding a layer of fragmentation.

The second is regulatory design. The DLT Pilot Regime, intended to create a sandbox for institutional DLT market infrastructure, caps total market volume at €6 billion and imposes per-instrument limits that make commercial-scale operations economically unviable. 

In April 2026, a coalition of 39 European financial institutions and industry associations, including Nasdaq, Boerse Stuttgart, Danske Bank, and Union Investment, sent a joint letter to Brussels demanding emergency standalone legislation: raise the volume cap to €100-150 billion, delete per-instrument limits, open the regime to all asset classes, and make licenses permanent. As of this writing, Brussels has not responded.

The third blocker is the secondary market liquidity gap. In an April 2026 paper on Europe's
digital capital market, the ECB noted that despite a rise in primary issuance, actual trading of DLT-based securities on secondary markets remains scarce. In plain terms, more tokenized bonds are getting issued, but almost nobody is trading them once they exist.  At the Network Forum, 69% of respondents cited lack of client demand, not regulation or technology, as the main barrier to DLT adoption. Without a liquid secondary market, there's no pricing certainty, no institutional-grade distribution, and ultimately no client demand.

State of the market and our vision

In 2025, European issuers placed €893 million in DLT-based fixed income, down from €1.7 billion in 2024, with the decline largely attributable to the end of ECB-driven trials. In the same period, Asia issued €3.8 billion, representing 78% of global DLT issuance. 

While many institutions have a DLT project live or in proof-of-concept stage, the distance between institutional readiness and client-facing deployment remains there. Still, adoption in TradFi is a multi-track story. Crypto trading, tokenization, market infrastructure, and payments each face different obstacles, whether it's a distribution question, a liquidity blocker, or a network effects problem. Regulation can remove obstacles, but it can't manufacture the liquidity or network effects the market still needs to find on its own.

That growing maturity isn't a reason to wait. The EU has made this a stated policy priority, tokenization sits inside the savings and investments union agenda, and the ECB is building settlement infrastructure specifically to support it. Every institution has to decide today how to build the product infrastructure and compliance capability needed to compete for a client base. 

At Tangany, that's the vision behind our white-label partnerships: we know that building licensing, custody, and technical infrastructure from scratch might not be the most efficient way to find out where the real opportunity sits. Custody alone can absorb a disproportionate share of internal focus when handled in-house. Through a white-label partnership, an institution gets the expertise, the infrastructure, and the regulatory groundwork already in place, and can spend its own effort on deciding where to compete and how to help shape the market.

→ Download our white-label guide

Sources

• ECB speech by Piero Cipollone, "Building the rails for Europe's tokenised financial markets," 23 March 2026. Online

• AFME, "DLT-Based Capital Market Report" 2025 FY. Online

• ECB Macroprudential Bulletin, April 2026. Online

• Yahoo Finance / CCN, "Full List of European Banks Opening Crypto Trading to Retail Clients". Online

• NYALA, eWpG guide. Online

• ESMA, register of Authorised DLT Market Infrastructures under the DLT Pilot Regime . Online

• Ledger Insights, on the April 2026 coalition letter to Brussels on DLT Pilot Regime reform. Online

• BCG/Ripple, "Approaching the Tokenization Tipping Point" . Online

• ESMA MiCA CASP register (csv file, August 2026)