Developing the first EU-regulated blockchain exchange and cutting digital asset handling time from days to minutes
Executive Summary
Challenge: Turning the innovative idea of the first ESMA-regulated trading and settlement system for security tokens and crypto assets into a compliant and fast digital solution.
Approach: We have leveraged our expertise in multiple blockchain technologies and smart contracts to support development of a platform that facilitates atomic matching between E-Money and any compliant asset tokens.
Result: Our client is at the point of revolutionising the future of capital markets by enabling peer-to-peer settlement of financial instruments natively on the blockchain, reducing operation time from several days to even minutes.
Services we used:
Table of Contents
About the client
21X, a subsidiary of 21.finance AG, is a team of creative thinkers and experts in capital market, digital assets, and public blockchain.
Their main aim is to make financial services democratic and accessible with the first licensed DLT trading and settlement system under the EU DLT Pilot Regime.
EU DLT Pilot Regime: the opportunity
Until today, traditional stock exchanges required a large number of intermediaries (like clearing houses or transfer agents) to route regulated and compliant transactions between buyers and sellers.
And the more intermediaries, the more costly, more complex, and slower the process was.
However, the new EU DLT Pilot Regime has opened the new possibility of simple peer-to-peer trading.
This means that complaint retail and institutional investors will soon be able to safely buy and sell peer-to-peer on convenient platforms, saving both assets and time.
What traders now need is a user-friendly trading platform regulated by the European Securities and Markets Authority (ESMA), and 21X is the first organisation to fully capitalise on this opportunity.
Business challenge
From building a multi-blockchain trading environment to fitting tech solutions into regulatory framework imposed by the DLT Pilot Regime: the idea of making security tokens and crypto assets trading and settlement fast and seamless poses a number of challenges extending far beyond software delivery.
Even 21X, a company started by a group of disruptors and experts in capital market, needed to enhance their capabilities to design and deliver the first ESMA-licensed system, appealing to traders, buyers, and our client’s investors alike.
Empowering business with platform engineering
When choosing the right partner for this project, the company decided to turn to us, as we’ve already completed one project together: a customisable, white-label Marketplace as a Service for digitised assets listing and distribution.
Together, we’ve built an MVP of a platform, selected technologies and solutions for software development, cloud architecture, and platform engineering.
By adopting our platform engineering practices, we’ve achieved a significant 75% reduction in time needed to deploy the platform’s cloud infrastructure.
As 21.finance’s team decided on the overall tech stack and cloud solution used in the project, our engineers and DevOps architects consulted on and implemented solutions to build the environments to efficiently deploy and test new versions of the components.
With our client’s business ambitions growing, our previous collaboration helped them gain certainty that we have all it takes to support their new innovative concept.
Innovation in capital market
21X is the first to have submitted a license application to ESMA for their solution that leverages peer-to-peer atomic matching and settlement of financial instruments natively on the blockchain.
When preparing their application, 21X used our expertise to translate complex ESMA legal requirements into the blockchain and smart contract solutions. We played a pivotal role in enhancing technological understanding between 21X and ESMA officials, streamlining the whole legal process.
As we’re clearing the legal path within the regulatory EU framework and the license approval is pending, our work has already received significant media coverage, shifting the focus of trading experts and potential investors to 21X’s solution.
Understanding Blockchain 3.0
In order to stay ahead of the dynamic world of cryptocurrency, 21X decided to build foundations of their solution leveraging all standout features of Blockchain 3.0, including scalability and interoperability.
Being a pioneer in the field, the company decided to trust our experts in various blockchain types with the design and development of a versatile digital environment. Our task was to enable communication and interaction among multiple blockchain types, including extreme variations, without any intermediaries. This approach aimed to enhance the convenience and speed of transactions.
Another challenge we tackled was enabling faster and more reliable transactions through atomic matching & investment on a public blockchain infrastructure.
Our solution reduces the risk of errors and mismatches – a feature essential for a DLT ecosystem in which maintaining accuracy and reliability of the ledger is of major importance.
Moreover, to further enhance efficiency of their product, 21X needed to provide a smooth onboarding process for retail and individual investors. We understood that in order for this solution to attract more customers and investors, it had to be both regulatory compliant and user-friendly, so we’ve combined these two crucial perspectives into one seamless trading experience.
Looking to the future
As the first DLT market platform leveraging peer-to-peer trading and settlement is soon going to be live, 21X is expanding their network with capital market players, financial institutions and blockchain companies to further democratise their trading environment.
We’re ready to take on new challenges posed by disruptive blockchain environment, offering a rare combination of difficult to source talents and experts who can consult on solutions and build efficient multi-blockchain environments.
Technologies used in the project
