The Central Securities Depository Prague (CDCP) has become the first institution to receive official authorisation under the EU’s Distributed Ledger Technology (DLT) Pilot Regime, a regulatory framework aimed at supporting blockchain-based securities trading and settlement. The Czech National Bank granted the approval, following notification from the European Securities and Markets Authority (ESMA). CDCP is set to launch its DLT settlement system on 18 November.

The DLT Pilot Regime, which came into force in March 2023, was designed to relax certain regulations to allow for DLT-based trading, settlement, and direct retail access to investments. The framework includes three types of authorisations: for exchanges (DLT MTF), settlement systems (DLT SS), and platforms that combine both functions (DLT TSS). CDCP has been approved as a DLT settlement system (DLT SS).

Ondřej Dusílek, CEO of CDCP, emphasised the significance of this development for the Czech capital market, noting that the platform would provide alternative financing opportunities for small and medium-sized enterprises. The platform enables the issuance and transfer of bonds or shares without the need for additional intermediaries. Furthermore, unlike traditional central securities depositories, individuals will be able to open accounts directly using the widely used BankID system, allowing them to store and trade digital assets.

Infrastructure

Institutions will also be able to participate by operating their own nodes on the network. This infrastructure is expected to be particularly beneficial for companies offering employee stock ownership plans (ESOPs) and for fintech firms such as crowdfunding platforms, which will be able to connect directly to the DLT network.

CDCP’s DLT platform supports both transfers with and without cash settlement. In the latter case, transactions are completed instantly when instructions from both parties match, a feature expected to appeal to crowdfunding platforms and other similar services. For cash settlements, payments are made to CDCP’s account, and the transaction is finalised upon receipt of the funds.

Meanwhile, the UK recently opened its Digital Securities Sandbox to applications.