Revolution or Colonization? Banks Have Invaded Europe’s Tokenization Landscape

Tokenization was born as a almost romantic promise: removing banks from the equation. A financial system with no gatekeepers, no tolls, no need to ask anyone for permission. In theory, anyone could move their money as easily as sending a photo on WhatsApp. But in Europe, the opposite has happened: the same players as always have stepped into the arena, pinned on an “innovation” badge, and are now using the very technology that was supposed to disrupt their business to reinforce it. The uncomfortable question is simple: if tokenization was meant to free you from intermediaries… why does everything now pass through them again?

Behind the word “tokenization” you no longer find the early crypto geeks, but large banks, custodians, CSDs, and institutional funds that have taken control of the infrastructure. What was sold as a “crypto-style” revolution (open and permissionless) has, in Europe, turned into a controlled system with turnstiles and guards: private or semi-private blockchains, restricted access, and everything under the same regulatory framework as always. A 2025 international IOSCO report makes it clear: most tokenization projects are evolution, not revolution, fitting neatly into existing financial structures instead of replacing them.

In this article, we bring all of this down to earth: how banks are colonizing tokenization in Europe, what parts of the original crypto promise have been lost along the way, and what this means for any DeFi or tokenization startup trying to operate in the EU and Spain without being crushed by the regulator.

From the Crypto Utopia to the Banking Conquest

A decade ago, tokenization sounded like libertarian sci-fi: turning shares, bonds, or houses into tokens on a public blockchain and sending intermediaries straight to the museum. Why would you need a bank to safeguard your securities if a simple Ethereum token could prove they were yours? Why rely on a clearinghouse if a stablecoin could settle instantly?The dream was clear: goodbye custodians, goodbye queues, goodbye asking for permission. The crypto utopia promised a great cleansing of the financial system - “death to intermediaries.”

But the reality in 2025 is far colder: the tokens that are succeeding today come with an institutional surname. Banks haven’t been displaced - they’ve become the architects and guardians of the new infrastructure. Yes, blockchain… but supervised. Yes, tokens… but held by the same players as always. Yes, modernization… but with them sitting comfortably in the front row.

The 2025 IOSCO report shows that most tokenized financial assets today are economically identical to their traditional counterparts. A decentralized revolution? More like a quiet conquest. Institutions have adopted the efficiency narrative (“DLT to reduce friction”) but turned it into an extension of their own order. They’ve built their own closed networks, with permissioned nodes, supervised smart contracts, and digital assets that look new but obey the same old logic. The fantasy of a parallel, open, permissionless system is fading as a corporate blockchain grows - promising innovation without subversion.

Closed Infrastructures: Private Blockchains and “Walled Gardens”

One of the pillars of this colonization is very simple: whoever controls the infrastructure controls the game. Instead of using public, permissionless chains (like Ethereum or Solana), where anyone can participate, major players are building private blockchains or semi-private networks. These are walled gardens: only those on the list get in. Only authorized entities can validate transactions, custody assets or, in some cases, even see what’s happening inside. You keep the speed and automation of DLT (near-instant transfers, smart contracts, etc.), but throw away the very thing that made all of this special: openness and real decentralization.

Examples abound. Euroclear, one of Europe’s largest securities depositories, launched its D-FMI platform to issue and settle digital bonds. The architecture? A private, permissioned blockchain: Euroclear and a handful of approved participants control the nodes and decide who gets to play. The IOSCO report explains that both Euroclear and SIX Digital Exchange (SDX, in Switzerland) operate private chains with deterministic processing: once a transaction is settled on the ledger, it is final and immutable. Great for “settlement certainty,” yes… but the public has no place there: no open miners, no volunteer validators, no everyday users. Only identified and filtered participants.

The Asian Infrastructure Investment Bank (AIIB) illustrates this perfectly: in 2024 it issued a $300 million digital bond (later expanded to $500 million) using Euroclear’s DLT. A “historic” issuance - but inside the private corral of a banking infrastructure. Euroclear’s network is not Ethereum: every participant was individually approved - from the lead managers (Citi and others) to the issuer and custodians.

Even when big players opt to use public blockchains, they impose permission layers on top. A textbook example is Franklin Templeton. Its Franklin OnChain U.S. Government Money Fund, a tokenized money market fund, issues tokens on public networks (at one point up to eight, including Stellar), but not just anyone can transfer or hold those tokens. The manager built a permissioned system on top of open chains: wallets must be whitelisted, and a central transfer agent has full control over the register.

In fact, that agent can reverse erroneous or unauthorized transactions, and even reissue tokens if an investor loses their private keys. Where original crypto tech would say, “sorry, lose the key, lose the money,” this institutional model says, “don’t worry, the intermediary will fix it.”

The self-custody freedom championed by Bitcoin disappears in this model. Reversibility, delegated custody, and human intervention re-enter through the front door - because the regulatory and operational framework demands it. If you make a mistake, the blockchain doesn’t decide. The intermediary does.

BlackRock, with its tokenized BUIDL fund, plays exactly the same game. The tokens represent shares in a dollar liquidity fund and live on Ethereum, Polygon, and other networks - but they’re not “yours” in the crypto sense. Issuance and transfers are controlled by Securitize (a SEC-registered transfer agent) and by heavyweight custodians like BNY Mellon and BitGo. Access isn’t open: only qualified clients, only vetted entities.

BUIDL has expanded to seven blockchains for efficiency, but the same unwritten rule applies everywhere: funds only move between verified wallets.

This preference for closed networks is no accident, it responds to very clear incentives. First, controlling who enters and what they can see: in a permissioned network there are no curious onlookers, no public observers, no “rogue nodes” questioning anything. Only filtered and fully identified participants.

Second, making life easier for the regulator: if you know exactly who validates and who moves what, blocking “undesired” transactions, applying sanctions, or enforcing KYC/AML becomes much simpler.

Third, avoiding the technical headaches of public chains: congestion, forks, energy consumption, miner wars, and so on.

IOSCO itself acknowledges that many operators prefer private DLTs because public ones suffer from scalability issues, fork risk, and mining power concentration. Paradoxically, private networks fall into the same sin: they also concentrate power, just in “a defined set of parties”, essentially a mini-oligopoly of well-known validators.

What the technology was supposed to disrupt has been rebuilt under a different name. But from a banking perspective, it makes perfect sense: better a closed circle of friendly validators than a swarm of anonymous miners deciding consensus without asking permission.

The net result is clear: blockchain infrastructure in finance is fragmenting into corporate fiefdoms. Each major institution is building its own closed DLT (or consortium) - JP Morgan with Onyx/Kinexys, SIX with SDX, Euroclear with D-FMI, Deutsche Börse and partners with 360X, and so on - and interoperability between them is practically non-existent.

Custody and Control

A core pillar of crypto ideology was self-custody: “your keys, your coins.”But in today’s institutional tokenization ecosystem, that philosophy has been almost entirely erased. Token custody remains in the hands of financial intermediaries (just like before) and for reasons regulators (including IOSCO) consider valid. They warn that allowing investors to self-custody tokenized bonds or assets without a professional custodian introduces unique risks of loss or fraud that are difficult to mitigate.

In other words, the priority is preventing a retail saver from losing a tokenized bond due to a hack or mistake - even if that means the asset isn’t truly “in their pocket,” but locked in a bank’s digital vault.

As a result, in the tokenized structures that dominate today, custodians still exist, only now they are crypto custodians. They may be traditional banks adapted to the new model, or specialized licensed custodians such as Anchorage or BitGo working alongside banks in BlackRock’s BUIDL fund. The principle is identical to traditional securities markets: your shares are “in custody” at a bank or broker - and so are your tokens. Many DLT implementations even use hybrid models: the investor may have a personal wallet, but it is controlled or supervised by a custodian. For example, a bank custodian can manage private keys on behalf of the client and validate transactions on the DLT network, effectively acting as a sub-registry within the chain.

Spain has now formalized this custodian/registrar role in law. The LMVSI (Law 6/2023) recognized tokenized securities on DLT as a fully valid legal representation (alongside physical certificates and book-entry systems). But immediately afterward, it required every tokenized security to have a designated ERIR - an “Entity Responsible for Registration and Record-Keeping.”What does this mean? Even if a tokenized share or bond circulates on a distributed network, a legally appointed intermediary must administer that registry.

The CNMV explains it clearly: DLT ensures immutability and traceability, and in theory no trusted third party is needed - but the law still demands an entity to supervise and validate the record. This entity (typically a securities firm, custodian bank, or authorized CSD) becomes the ultimate guarantor of the token registry’s fidelity, equivalent to Iberclear in the traditional market.

Not everyone can play this role. To issue tokenized securities in Spain, you must either be a regulated financial institution capable of acting as ERIR or partner with one. This dramatically raises the barrier to entry for crypto-native startups.

A project wanting to tokenize equity or real-estate shares cannot simply deploy a smart contract on Ethereum and start selling tokens. It must comply with full financial procedure: prospectus (if public offering), a registered issuer, an ERIR overseeing the DLT network, and more.

For the retail investor, the legal comfort ends up being identical to buying a traditional security (their ownership appears in a CNMV-validated registry) but that comfort comes at the cost of losing disintermediation. One commentator put it bluntly: “We’ve digitized securities, yes, but we also digitized the notary, the custodian, and the regulator so none of them would lose their seat.”

From a technical-legal perspective, this institutionalized custody solves many headaches. For example, finality: on public chains like Ethereum, settlement can be probabilistic (waiting for confirmations) and reversible in case of forks. On private bank-run platforms, once the central node marks a transaction as settled, the matter is closed - delivering immediate legal certainty.

Likewise, if a DLT platform or custodian collapses, the legal framework provides mechanisms to migrate tokens to another registry or convert them back into traditional securities - avoiding legal limbo. All of this is excellent for market safety… but leaves a bitter aftertaste: this is not the vision that excited early blockchain believers. They did not dream of blockchains administered by the same banks as always, but of eliminating the need to trust them.

IOSCO acknowledges this double-edged sword. On one hand, tokenization could make certain intermediaries unnecessary (a distributed ledger could, in theory, eliminate the central registrar). But regulatory reality keeps those intermediaries firmly in place due to legal or practical requirements. The functions change in form, not in substance: the custodian now manages private keys instead of vaults, and the CSD now operates a private DLT instead of an Oracle database - but they remain. Large banks have ensured that technological progress does not displace them, but rather recycles them into new roles. Full disintermediation, for now, remains shelved in the utopia drawer.

The Regulatory Wall: MiCA, LMVSI and the Perimeter of What’s “Allowed”

Beyond the banks’ private initiatives, another decisive factor behind the banking takeover of tokenization is the regulatory wall. Europe has made it clear that financial innovation is welcome - but only inside a controlled perimeter. Two recent legislative frameworks set the tone: the EU-wide MiCA Regulation (Markets in Crypto-Assets) and, in Spain, the LMVSI 2023 and its regulatory development. Both create an environment where crypto-assets and tokenized instruments can thrive, but only if they follow rules equivalent to traditional finance. It’s the principle of regulatory analogy in action.

MiCA, approved in 2023, harmonizes for the first time in the EU the issuance of crypto-assets that are not traditional financial instruments (think stablecoins, utility tokens, etc.). It requires token issuers to meet solvency standards, governance requirements, and publish regulated whitepapers, and it forces crypto trading platforms to obtain authorization as CASPs under supervisory oversight. Who does this sound like? Banks, of course. MiCA essentially transports the banking/financial model into the crypto sector: licenses, minimum capital, client-asset segregation, AML controls…It’s a direct blow to the startup culture of “move fast and break things.”Under MiCA, moving fast and breaking things means breaking the law and being kicked out of the market. The small developer with an innovative idea who needs to issue a token will have to think twice or partner with a regulated entity. This natural regulatory filter once again favors those already inside the system.

However, MiCA explicitly excludes crypto-assets that qualify as financial instruments (tokenized shares, tokenized bonds, tokenized funds).Those fall under the existing securities framework (MiFID II, national rules) plus the EU’s new DLT Pilot Regime.

The DLT Pilot Regime (in force since March 2023) is especially important: it allows market infrastructures (exchanges, CSDs) to experiment with blockchain for trading and settling tokenized securities, benefiting from temporary exemptions. But, crucially, only entities already authorized as trading venues or CSDs may participate.

Once again, the rebellious startup cannot create a DLT securities market out of thin air; it must be BME, Deutsche Börse, Euroclear… or work with them. After a year of the pilot, only three entities had obtained a DLT license in Europe: the Prague CSD, and two German initiatives (360X AG and 21X AG), both backed by major institutions.21X, based in Frankfurt, obtained approval in 2024 to operate a blockchain-based trading and settlement system, planning to run it on a permissionless network - but still under BaFin’s scrutiny. A noteworthy exception, yes, but it proves the rule: every piece requires regulatory approval. And approvals only go to those who can afford the expensive, slow process - something a small newcomer rarely survives without sponsorship.

In Spain, the CNMV has been proactive in setting this legal perimeter. We already mentioned the new ERIR figure for DLT registries. In November 2024, the CNMV approved Ursus-3 Capital as the country’s first ERIR and began registering the first tokenized issuances.

This milestone cemented legal certainty: tokenized shares and bonds issued in Spain finally enjoy official registry recognition, traceability, and investor protection equivalent to classic securities. But the other side is unavoidable: everything must pass through CNMV’s gate. If a tech company decided to tokenize real-estate shares without complying with the law, its tokens would be legally worthless - or worse, classified as an illegal securities issuance. The new institutional wall clearly separates what is allowed - ERIR-controlled tokenization, approved prospectuses, licensed custodians (from what is forbidden) wild, crypto-native tokenization outside supervisory radar. In practice, this creates a dual market: regulated, mainstream tokenization (banks, asset managers, exchanges) versus a shrinking, semi-underground crypto parallel.

Regulators such as CNMV don’t hide their motives: investor protection, financial stability and trust. Without these walls, tokenization could become a no-man’s-land full of fraud, uncontrolled volatility and systemic risk. They may have a point - the history of anarchic crypto assets provides plenty of ammunition. But the outcome is undeniable: the rules favor those who already have licenses and capital.

The outsider must tame their project to make it acceptable. Spanish projects such as Token City or Brickken have adapted to fit the framework: Token City partners with Ursus-3 (ERIR) and Onyze (custodian) to offer fully compliant tokenizations. Real-estate platform OpenBrick entered the CNMV sandbox to issue tokens under the European crowdfunding regime (ECSP) with traditional financial partners. Even pure DeFi startups operating in the EU are now building complex legal structures or seeking regulatory safe harbors to avoid crashing into MiCA.

Transformed Narrative

This entire process has radically reshaped the narrative around financial blockchain. Where the conversation once centered on democratization, individual empowerment, and breaking the established order, the dominant discourse now highlights efficiency, resilience, regulatory compliance, and “new opportunities” within the existing framework. It’s a subtle but powerful shift: the technology is the same, but the story is no longer “we’re going to dethrone Wall Street” - it’s “Wall Street 2.0 is coming to blockchain.”

Large banks and investment funds have mastered the art of co-opting the rhetoric. They talk about “tokenization to improve liquidity and financial inclusion” or “democratizing access to assets” - but what they really mean is allowing more people to buy tokenized units of a Blue-Chip fund, not opening the door to anonymous decentralized issuers.

BlackRock, for example, markets its BUIDL fund as giving institutional clients faster yields and 24/7 operations, emphasizing how its success “validates the viability of tokenized securities for major institutions.”

Larry Fink, BlackRock’s CEO, proclaims that “every asset can be tokenized” and foresees revolutionary changes in financial markets - but in his vision, those tokenized assets remain under traditional custody and regulatory oversight, merely moving on a blockchain rail. It’s a domesticated enthusiasm: revolution becomes controlled evolution.

On the regulatory side, the same pattern appears. The CNMV and other European authorities proudly announce how Spain is leading the way in tokenized-asset regulation, how the framework “democratizes access to real-estate investment” safely, or how innovation and investor protection now go hand in hand. All of that is partly true (a retail investor may soon buy €100 of a tokenized real-estate bond, something previously unthinkable) but always within a heavily supervised environment.

What About the Original Philosophy?

For purists, this entire scenario feels like a betrayal of crypto’s founding principles. Goodbye pseudo-anonymity, goodbye borderless global access, goodbye full individual sovereignty. Institutional blockchain does not empower the end user any more than the traditional banking system did - it may offer faster transactions or more liquid markets, but it does not hand over control. Still, it would be unfair not to acknowledge the achievements: thanks to this regulated integration, tokenization is reaching a scale that DeFi alone could never achieve so quickly.

And the numbers prove it: BUIDL is nearing $3 billion in tokenized T-bills, Franklin Templeton has surpassed 300,000 on-chain investors, European banks like KfW have issued €5 billion in digital bonds under the new legal framework, and JP Morgan Onyx has processed $1.5 trillion on its private blockchain network.

These figures would have been unthinkable without regulatory approval and major institutional involvement. In a way, the banking takeover of tokenization has given the sector scale and legitimacy that the rule-averse crypto ecosystem could not reach on its own. The question is: at what cost to its original values?

For DeFi projects and tokenization startups, the challenge now is finding their place in this new order. Some try to act as bridges - fintechs bringing distributed-ledger technology to incumbents, accepting the regulatory game in exchange for opportunity. Others retreat into less scrutinized niches (pure utility tokens, NFTs, anything that doesn’t trigger regulators).And a few opt for indirect confrontation: continuing to build open protocols with the hope that regulation will eventually adapt to them - for example, DeFi protocols integrating regulated tokens without formal permission, operating in a grey-market zone.

However, in Europe the supervisor’s stance is unmistakably firm: “same activity, same risks, same rules.” The Spanish sandbox has made it explicit that even testing “decentralized trading” must fall under supervisory control. In other words, don’t expect a permissionless, Uniswap-style marketplace for tokenized securities to quietly slip through the cracks. That ship will not sail in European waters without a licensed captain at the helm.

Flagship Cases

To ground these trends, here are several illustrative examples where banks and major financial institutions already dominate the tokenization landscape - effectively setting the new standard.

UBS and SIX Digital Exchange (SDX)

In 2022, Swiss bank UBS issued the first native digital bond ever launched by a global institution: a CHF 375 million senior bond with a three-year maturity. The instrument was issued and settled on SDX, the Swiss Stock Exchange’s permissioned DLT platform, and listed both on SDX and on the traditional SIX exchange. Innovation? Yes - but within a fully licensed environment. SDX operates as an authorized exchange and central securities depository in Switzerland, and UBS acted as both issuer and custodian. The bond was split into two legs (a digital tranche on SDX and a conventional one on SIX), proving the new infrastructure can coexist seamlessly with the old.

In practice, investors bought “the usual UBS bond” without even realizing part of it was on blockchain. The tech worked, but bank control over issuance and custody was never at risk. (Switzerland isn’t in the EU, but it serves as an early mirror of what Europe is now adopting.)

Euroclear and the AIIB Digital Bond

As mentioned earlier, Euroclear (the beating heart of European financial markets) launched its D-FMI platform in 2024 with a $300M digital bond issued by the Asian Infrastructure Investment Bank (AIIB), later expanded to $500M.It was the first fully digital USD-denominated issuance on Euroclear. The bond’s tokens were recorded on Euroclear’s private DLT network, while investors traded them knowing they appeared in Euroclear’s legal register in Belgium. Citi acted as paying agent, and the Luxembourg Stock Exchange listed the instrument - demonstrating full compatibility with the traditional financial ecosystem.

The milestone was hailed as “technological vanguard,” but again, there was nothing resembling crypto-anarchy: smart contracts were custom-built, and only vetted participants interacted with the system. Euroclear hinted that the model reduces intermediaries in certain stages (e.g., simultaneous multi-book registration), but ironically it used the occasion to reaffirm itself as an indispensable intermediary in the blockchain era.

Franklin Templeton – Franklin OnChain U.S. Government Money Fund (BENJI)

Franklin Templeton, one of the world’s largest asset managers, pioneered the tokenization of a U.S. money market fund.The BENJI token represents shares in a U.S. Treasury fund, giving retail investors the ability to buy and sell units 24/7 in tokenized form. Its hybrid architecture combines an off-chain register (investor data) with on-chain settlement (token movements).

Crucially, the on-chain ledger is legally recognized as part of the fund’s primary register - a bold step with the SEC. However, the transfer agent (Franklin) retains full authority: it can freeze, correct, or reissue tokens as needed. The fund is open to the public, but digital wallets must be authorized. Franklin proved that compliance and blockchain can coexist - at the cost of fully domesticating the crypto experience. Even today, the fund works smoothly and attracts blockchain enthusiasts seeking a tokenized traditional asset - but BENJI tokens can’t be freely sent around. Only whitelisted wallets may receive them.

BlackRock: BUIDL

The headline case of 2024.BlackRock launched its USD Institutional Digital Liquidity Fund, known as BUIDL, which rapidly became the world’s largest tokenized fund with $2.9 billion in assets.

The fund invests in T-Bills and cash - essentially a tokenized money-market fund whose token is always worth $1.00.BUIDL was initially issued on Ethereum, but BlackRock pursued a multi-chain strategy: it now operates across seven blockchains (Ethereum, Polygon, Solana, etc.) to leverage each network’s advantages. This might sound like openness, but the reality is more controlled: all tokens move through monitored bridges (like Wormhole) and maintain strict KYC restrictions across every chain.

Behind BUIDL lies the full TradFi machinery:

• Securitize handles issuance and compliance,

• BNY Mellon safeguards traditional assets,

• Anchorage and others custody private keys.

BUIDL is not a crypto-native product - it is institutional tokenization dressed in blockchain rails, fully aligned with the banking takeover of tokenization.

The success has been overwhelming (the fund grew by 576% in a single year) and it has become tightly integrated with the crypto ecosystem: for example, it is accepted as collateral on major exchanges and even backs, up to 90%, a so-called decentralized stablecoin (Ethena Labs’ USDtb).

This last point is fascinating: a BlackRock product underpinning a DeFi stablecoin. It’s the fusion of both worlds - but once again, BlackRock holds the off-switch. If something goes wrong, it can freeze redemptions via Securitize and others.BUIDL has given regulators powerful arguments that large-scale tokenization can be run “safely”, and Larry Fink has positioned himself as one of its loudest evangelists.

A Wall Street giant leading the supposed “token revolution” - the perfect irony in the story of the banking takeover of tokenization.

JP Morgan – Onyx / Kinexys

Of course, JP Morgan had to appear here. It was arguably the first major bank to take blockchain seriously, and its Onyx platform (renamed Kinexys in 2024) is proof that high-level finance is already using DLT in production.Onyx began with the creation of JPM Coin (a tokenized deposit for internal payments) and later expanded into an interbank network for settling intraday repos and other tokenized assets.

The numbers are staggering: since launch, Onyx has processed more than $1.5 trillion in transactions (roughly $2 billion per day on average) including some of the largest repos ever executed on a blockchain.JP Morgan essentially replicated its payments and settlement business on a proprietary DLT infrastructure built on a private version of Ethereum Quorum. In 2024, the bank rebranded the platform as Kinexys and integrated FX payments, enabling near real-time settlement of currency pairs such as USD/EUR.

Naturally, only banks and large corporations participate; it is a private club stamped with the JP Morgan badge.But the principle is unmistakable: if tokenization was supposed to eliminate banks, JP Morgan simply tokenized itself first.Now it offers clients faster, more efficient services through blockchain - while retaining full control of the network.

This move highlights how banks are adapting the technology to reinforce their dominance rather than surrender it. And so far, it’s working - Kinexys is already essential in certain markets (24/7 payments, smart collateral, intraday liquidity).The DeFi promise of making megabanks irrelevant falls apart when a megabank adopts DeFi internally - and its clients feel only the upside.

Other Cases Across the EU

It would be impossible to cover everything, but it’s worth noting that virtually every major European financial institution is now experimenting with tokenization under its own control.

Société Générale, through its Forge subsidiary, has issued bonds on Ethereum - but using smart contracts it can pause at will, and available only to institutional buyers.

Deutsche Börse has invested in platforms like 360X, aimed at tokenizing art and debt under BaFin licensing.

BME (the Spanish Stock Exchange) partnered with the startup OpenBrick (backed by Grupo Lar and Renta 4) to build a tokenized real-estate securities platform - BME providing the regulatory and infrastructure backbone, and the startup delivering the blockchain tech.

Even mid-sized institutions are moving: Renta 4 tested tokenized participatory loans in the CNMV sandbox; and Prosegur, traditionally a security company, launched a fully tokenized securities agency called Minos.

And we shouldn’t forget sovereign issuers.The European Investment Bank (EIB) was a pioneer with its 2021 digital bond on Ethereum (with Goldman Sachs leading the operation), and more recently both the Hong Kong government and Germany’s KfW have issued multi-billion-euro DLT bonds.

A New Paradigm and the Path Forward for Startups

Is all of this good or bad? As always, it depends on the lens. What’s clear is that blockchain hasn’t destroyed the financial order in Europe - it’s transforming it from within. Major banks and market infrastructures have successfully colonized tokenization and made it their own, creating a hybrid paradigm: the technology is revolutionary, but its implementation is tightly controlled. In a way, it’s a victory for the system - it absorbed the disruptive blow and turned it into a catalyst for self-improvement.We now have potentially more efficient markets, operating 24/7, with less friction and global reach… but still governed by the same laws and dominated by the same players.

For early crypto believers, this feels like defeat or co-optation.The utopia of total disintermediation is a distant dream when even using a digital wallet requires permission from a custodian bank. Yet there is a positive side: mass adoption will likely come through this institutionalization. Retail investors in Europe will be able to access tokenized assets with the comfort of a legal framework and without worrying about complex wallets or scams in the shadows. Mainstream tokenization could democratize certain investments (for example, allowing someone to buy €100 of a tokenized EIB bond, previously impossible) with lower costs and improved liquidity, as long as everything flows through an authorized bank/issuer. It’s progress, even if it falls short of the original libertarian ideal.

For startups and projects that want to tokenize while complying with CNMV/MiCA/LMVSI, the message is twofold. First: it’s not impossible - but you must play by the rules. It requires legal and technical discipline: obtaining proper advice, potentially securing licenses, partnering with financial institutions, or using the new structures that exist (ERIRs, the Spanish sandbox, regulated crypto service providers).The good news is that Spain already has a functioning legal framework for doing this properly.

If your project wants to tokenize company shares, you can go to the CNMV, present a DLT issuance with an ERIR and, where applicable, a simplified prospectus - and make it real with full legal backing. The regulated doors are open to innovation, as long as you show up with your regulatory passport in order.

And with initiatives like the sandbox and the EU’s DLT Pilot Regime, regulators have shown willingness to listen and adjust - fine-tuning rules so that startup technology fits without breaking the protective framework. Use that channel: it’s far better to build inside the perimeter and help push it forward than to stay outside crashing against the wall.

Second: Don’t Lose Sight of the Long-Term Vision. Today, tokenization in Europe may look heavily institutional, but the technology keeps advancing - and opportunities will emerge. Tomorrow, once trust and infrastructure mature, we may see gradual openings: for example, DLT marketplaces where retail investors trade peer-to-peer within certain limits, or regulated tokens interoperating across multiple commercial networks. Startups can play a crucial role in pushing for more openness and interoperability. Every successful project that demonstrates safety and efficiency gives regulators a reason to relax a requirement or open a new door. In the end, regulated innovation can also push boundaries from within.

The call to action is simple: be part of the change (even if you need to wear a suit and a regulatory helmet while doing it. If you have an idea to democratize investment through tokenization, build it within MiCA, talk to the CNMV, leverage LMVSI) there are pockets of creativity inside the law.

Europe is building a new tokenized financial paradigm that promises faster, more transparent, more accessible markets - yet it still drags along the old chains (not blockchains, the traditional ones) of tight institutional and regulatory control. That’s the price of legitimacy and scale. It may not be the masterless revolution some dreamed of, but it’s the reality taking shape. And within that reality, there is still a great deal to build - and to improve.

The banking takeover of tokenization doesn’t have to suffocate independent innovation; it can channel it. If you’re a blockchain entrepreneur in Europe, it’s essential to understand this new institutional wall. Climb it with knowledge and respect for the rules - and once inside, build tokenized products that truly deliver on promises of efficiency and democratization.

There remains the hope that, over time, that wall becomes more permeable, and the core crypto ethos (openness and equal access) eventually infiltrates the heart of the financial system. Until then, we move forward deliberately, balancing innovation with the order that now governs it.