Aave Labs submitted a comprehensive policy letter to the Central Bank of Ireland on DLT and Tokenisation in Financial Services. We greatly appreciate the opportunity to comment on CBI's Discussion Paper 12 and their leadership in shaping Europe's financial future.
Financial institutions are already moving on-chain. The policy question isn't whether tokenisation happens—it's whether Europe shapes the outcome or gets left behind.
Our core argument: European tokenisation will only succeed if built on public permissionless blockchain infrastructure with clear regulatory frameworks and harmonised private law reform.
Why public permissionless blockchains matter
Ethereum has processed 3.47B transactions with 100% uptime and zero unrecovered failures since 2015. Public consensus mechanisms provide distributed resilience, unprecedented supervisory transparency, and genuine interoperability that closed systems cannot offer.
The dual risk we're flagging
- Infrastructure risk: If Europe builds tokenised finance on fragmented, proprietary DLT platforms, we recreate the very inefficiencies the technology is meant to solve. Regulatory frameworks that implicitly favour closed systems over public infrastructure will lock Europe into isolated, less resilient architecture for decades.
- Legal risk: Existing EU property and secured transactions law across EU Member States were designed for physical assets or centralised registries. Digital assets don't fit. Without harmonised private commercial law reforms addressing the control/ownership distinction, even the best regulatory clarity rests on uncertain legal foundations. Luxembourg's Securitization Law could be a pragmatic near-term model. US UCC Article 12 (adopted in 33 states) could be a model for a longer-term approach.
Market evidence supporting public infrastructure
- Institutions are experimenting with 24/7 settlement and institutional lending on tokenised infrastructure now
- US tokenised assets: $25B (doubled YoY)
- Aave Protocol: $14.49B TVL across public blockchains
- BIS Project Agorá proves atomic settlement works on public infrastructure
- Cross-border payments: Currently 6.3% cost, 3-5 days → Tokenised: seconds
What we're asking the CBI
- Explicitly permit public permissionless blockchains under DORA
- Recognise settlement finality on public distributed ledgers
- Lead private law harmonisation on digital asset ownership and control
- Support EUR-denominated stablecoins as settlement assets
- Coordinate internationally on interoperability standards for public networks
Financial institutions won't wait for perfect regulation. They're building now. Europe can either lead by enabling public permissionless infrastructure and updating private law—or cede leadership to jurisdictions that do.