European financial markets are experiencing significant transformations with the introduction of new digital and regulatory innovations. Slovenia has become the first EU member to issue a sovereign digital bond, settling a 30 million-euro note on-chain through the Bank of France's tokenized cash system. Concurrently, the Netherlands-based One Trading has secured an Organized Trading Facility license, enabling it to launch regulated crypto futures in Europe. Additionally, EU regulators have released guidelines for classifying digital assets under the Markets in Crypto-Assets (MiCA) Regulation, aiming to bring clarity and standardization to the rapidly evolving crypto landscape.
One Trading Receives Dutch AFM License to Revolutionize European Digital Asset Market
Netherlands-based One Trading has secured an Organized Trading Facility (OTF) license from the Dutch Financial Markets Authority (AFM). This groundbreaking achievement positions One Trading to introduce a range of innovative financial products across Europe, including onshore crypto futures trading.
With the OTF license, One Trading is set to become the sole perpetual futures trading platform in the European Union and the first to offer cash-settled perpetuals in Europe, including the United Kingdom. This strategic move also makes One Trading the first regulated European derivatives exchange accessible to retail clients, marking a significant advancement in the region's financial landscape.
The OTF license enables One Trading to bring trading activities under local regulation, a process known as onshoring. Joshua Barraclough, CEO of One Trading, emphasized the company's long-term vision, stating, "Our goal is to empower all customer types to go long or short on any asset, use any asset as collateral, settle everything instantly, and perpetually roll contracts."
Barraclough highlighted the significance of the license, saying, "With this license, we are well-positioned to introduce new regulated products and offer institutional-grade solutions to all customer types, starting with BTC and ETH products, where no onshore EU regulated venue currently exists."
Leveraging distributed ledger technology, One Trading offers real-time derivatives trading around the clock without the need for external clearing. The platform was also the first in the EU to allow the use of crypto assets as collateral for trading regulated financial instruments, showcasing its innovative approach to digital asset trading.
One Trading's journey to becoming a trailblazer in the digital asset market is closely linked to its origins and backing. Initially launched as Bitpanda Pro by Austria-based Bitpanda in 2019, One Trading was spun off in June 2023 following a Series A funding round led by Valar Ventures, raising 30 million euros ($32.5 million).
Valar Ventures, co-founded by PayPal co-founder Peter Thiel, has been a key supporter of Bitpanda, backing it through three funding rounds. Thiel's influence extends to several other crypto enterprises, including the Vauld exchange, BitDAO (now known as Mantle), and Praxis, an ambitious project aiming to create a cryptocurrency-run city in the Mediterranean region. Praxis currently boasts 2,228 citizens and 146 registered companies, reflecting Thiel's visionary approach to integrating cryptocurrency into various aspects of society.
Bitpanda's Strategic Moves
In addition to spinning off One Trading, Bitpanda has been actively expanding its offerings to cater to different market segments. In January, Bitpanda launched Bitpanda Wealth, a service designed for European institutions and high-net-worth individuals.
One Trading's OTF license marks a new era for digital asset trading in Europe. By introducing regulated, onshore crypto futures and offering perpetual futures trading, One Trading is poised to transform the financial landscape, providing retail and institutional clients with unprecedented opportunities.
The combination of blockchain technology, regulatory compliance, and innovative financial products sets One Trading apart as a leader in the digital asset market. As the company continues to evolve and expand its offerings, it is expected to play a pivotal role in shaping the future of financial trading in Europe and beyond.
Slovenia Pioneers EU Sovereign Digital Bond with On-Chain Settlement
Slovenia has become the first European Union member state to issue a sovereign digital bond, marking a significant advancement in the adoption of blockchain technology in traditional financial markets. The 30 million-euro ($32.5 million) note was settled on-chain through the Bank of France's tokenized cash system, as part of the European Central Bank's (ECB) money settlement experimentation program.
The four-month digital bonds, maturing on Nov. 25, carry a coupon rate of 3.65%. Settlement for these bonds took place using wholesale central bank digital currency (CBDC) on Thursday, as confirmed by the Slovenian government. Unlike retail CBDCs designed for consumer use, wholesale CBDCs are digital tokens intended for use by financial institutions, enhancing the efficiency and security of large-scale transactions.
The issuance of Slovenia's digital bond aligns with the ECB’s ongoing efforts to explore the potential of digital currencies in the financial sector. In May, the ECB completed its first test of settling a wholesale CBDC, an initiative carried out by Austria's central bank. This initial experiment focused on the tokenization and simulated delivery-versus-payment settlement of government bonds in a secondary market transaction against central bank money.
Following this successful test, the ECB announced plans to conduct further trials and experiments in the coming months. These initiatives aim to explore the operational and technical feasibility of integrating digital currencies into existing financial systems.
“These initial transactions and experiments with wholesale tokenized central bank money represent an important steppingstone to greater transparency and efficiency of financial markets with wider technology adoption,” the Slovenian government stated. “While hardly material in financial markets at the moment in terms of value issued and/or traded, we expect the importance of distributed ledger technology to grow significantly in the following years.”
The government's statement brings attention to the transformative potential of distributed ledger technology (DLT) in enhancing the transparency, security, and efficiency of financial transactions. As more countries and financial institutions adopt DLT, the landscape of global finance is expected to evolve, driven by increased technological integration.
Role of BNP Paribas and Neobonds Platform
BNP Paribas played a pivotal role in this pioneering initiative, acting as the global coordinator and sole bookrunner for the digital bond issuance. The bank also operated the distributed ledger technology platform, Neobonds, which facilitated the on-chain settlement process. Neobonds is a private tokenization platform built using Digital Asset's Daml and leveraging the Canton blockchain.
The use of the Neobonds platform shines the spotlight on the growing collaboration between traditional financial institutions and innovative fintech solutions. By integrating DLT into its operations, BNP Paribas is at the forefront of the digital transformation in the financial sector, paving the way for more efficient and secure financial instruments.
Slovenia's issuance of a sovereign digital bond represents a significant milestone in the EU's journey towards embracing digital currencies and blockchain technology. As the ECB and other central banks continue to explore the potential of wholesale CBDCs, the financial industry is poised for substantial changes.
The successful settlement of Slovenia's digital bond on-chain demonstrates the feasibility and benefits of using blockchain technology in government bond markets. It also sets a precedent for other EU member states to follow, potentially leading to broader adoption of digital bonds and other blockchain-based financial instruments.
EU Regulators Release New Guidelines for Crypto Asset Classification Under MiCA
Meanwhile, regulators in the European Union have taken a significant step towards standardizing the classification of cryptocurrencies and digital assets by issuing new guidelines under the Markets in Crypto-Assets (MiCA) Regulation. The guidelines, released on July 12, aim to provide clarity and uniformity for market participants across the region.
Three prominent European Supervisory Authorities — the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) — have collaborated to release a comprehensive consultation paper. This document seeks to standardize and clarify how digital assets should be classified under the MiCA framework.
The newly released guidelines offer a structured approach to determining the classification of various types of crypto assets. This structured approach includes a series of question-based prompts designed to assess critical aspects of a token, such as:
- The identity of the issuer
- The blockchain basis of the token
- Whether the token qualifies as a type of financial instrument
These prompts help determine whether a particular token falls under the scope of MiCA and, if so, whether it qualifies as a standard crypto asset, an electronic money token (EMT), or an asset-referenced token (ART).
For issuers of asset-referenced tokens, the guidelines stipulate that white papers must include a legal opinion clearly explaining the classification of these tokens. This opinion must confirm that the tokens are neither electronic money tokens nor any other type of crypto asset excluded from MiCA's scope.
Additionally, white papers for crypto assets that do not fall under the categories of ARTs or EMTs must provide a detailed explanation outlining their classification. This requirement ensures that all market participants have a clear understanding of the regulatory status of the tokens they are dealing with.
The guidelines invite market stakeholders to submit comments on the consultation paper by mid-October. To facilitate this process, a virtual hearing is scheduled for Sep. 23. This engagement period allows market participants to provide feedback and ensure that the guidelines are practical and effective.
Patrick Hansen, Senior Director of EU Strategy and Policy at Circle, expressed support for the guidelines, stating on X (formerly Twitter) that they are "very helpful" and noting that "many people have been getting token classifications wrong under MiCA." Circle, a leading stablecoin issuer, has already complied with MiCA regulations, ensuring that its USD Coin (USDC) and Euro Coin (EURC) meet the new regulatory standards.
Initial and Upcoming MiCA Regulations
The first set of MiCA regulations came into force on June 30, targeting stablecoins and stablecoin issuers. These initial regulations laid the groundwork for a comprehensive regulatory framework designed to enhance transparency and stability in the crypto market.
The next set of MiCA regulations is anticipated to come into effect by December 2024. These forthcoming regulations will further refine the regulatory landscape, providing additional guidelines and requirements for various types of crypto assets and market participants.
In a proactive move, the Cardano Foundation, which oversees the ADA cryptocurrency, released sustainability indicators in compliance with the forthcoming MiCA regulations six months before they are set to take effect. This early compliance demonstrates the foundation's commitment to adhering to regulatory standards and promoting sustainable practices within the crypto industry.
