Dutch central bank, regulator call for legal change to keep up in tokenization race

The Dutch central bank, De Nederlandsche Bank (DNB), and the Authority for the Financial Markets (AFM) have issued a formal call for legislative reform to support natively digital securities in the Netherlands. While tokenization is currently permitted, the existing legal framework fails to recognize natively digital issuance, forcing Dutch firms to utilize foreign jurisdictions for such operations. The regulators highlight that the EU DLT Pilot Regime is insufficient because it grants infrastructure exemptions without resolving the underlying legal status of tokens under national law. To remain competitive, the Netherlands must align with peers like Germany, Luxembourg, and France, which have already amended their laws to recognize distributed ledgers as valid records of ownership. The paper also expresses caution regarding the European Commission's proposed 28th regime, warning that it could introduce redundant legal layers if not implemented comprehensively. This regulatory bottleneck underscores the broader European challenge of reconciling technology-neutral laws with financial market infrastructures that implicitly assume traditional, centralized designs. Addressing these legal gaps is essential for the Netherlands to participate effectively in the growing global market for tokenized financial assets.