What you need to know
- Tokenisation: Tokenisation replaces fragmented ownership registers with a single, shared digital ledger. It promises greater speed, efficiency and data integrity, with reduced costs and operational friction.
- ‘Digital twin’ models: Several Irish investment funds have recently been authorised by the Central Bank of Ireland to utilise a ‘digital-twin’ tokenisation model, whereby a traditional shareholder register is retained alongside a replica digital record.
- First EU-native securitisation: Europe’s first natively tokenised true securitisation offers an EU-wide blueprint, which the Irish securitisation/Section 110 SPV could seek to replicate.
- Open for business: Government and Central Bank commitment to encouraging DLT and tokenisation provides a supportive domestic pathway, with the Ireland for Finance Strategy 2026 notably elevating tokenisation to a high-priority national objective.
Introduction
Recent developments in Europe and Ireland demonstrate strong and positive governmental and regulatory support for tokenised financial products. Examples include the completion of Europe’s first natively tokenised securitisation in Italy, the Central Bank of Ireland’s landmark approval of tokenised fund share classes, and the Irish Government’s strong statement of commitment to developing digital assets and tokenisation under its Ireland for Finance Strategy 2026. Tokenisation offers a new and innovative model for the distribution of Irish funds and structured finance products. We explore its current and future applications, from ‘digital twin’ set-ups to fully native tokenisation models.
Building a new standard
Tokenisation is a framework that represents assets in the form of digital tokens using Distributed Ledger Technology (DLT). DLT provides a single, shared ‘source of truth’ for asset ownership using a synchronised digital ledger. Tokens can be ‘digitally native’, meaning they are created directly on-chain as the primary legal record. Alternatively, tokens can be ‘non-native’ ‘digital twins’, mirroring underlying assets that remain legally registered off-chain.
The integration of DLT into European capital markets gained traction recently with two important milestones. First came the completion of Europe’s first native, public-blockchain asset-backed securitisation. This transaction saw tokenised notes issued by an Italian SPV to acquire a portfolio of non-performing loans valued at almost €1 billion. Separately, the Central Bank of Ireland (Central Bank) broke new ground domestically by approving tokenised share classes for three money market funds (MMFs). The use case for tokenised share classes in MMFs is particularly noteworthy from a systemic perspective as such classes can allow for efficient collateral transfer without dealing in underlying MMF assets during stressed market environments.
Separately, the EU DLT Pilot Regime, administered domestically by the Central Bank, continues to offer a safe space to experiment and test emerging frameworks.
Policy support
Growing interest in tokenised products in Ireland echoes the ambitions of important domestic policy statements, which support the exploration of DLT and tokenisation use cases. Examples include the Funds Sector 2030 Review and the Department of Finance’s Ireland for Finance Strategy, which was recently updated for 2026, and which elevates tokenisation to a ‘High Priority’ national objective.
The Government’s Ireland for Finance Strategy 2026, subtitled ‘Vision 2030 – Renewed and Refocussed for a Digital Age’, represents a milestone statement of government commitment to digital transformation. It confirms that the Department of Finance will strengthen its engagement with industry on digital assets policy through periodic roundtables, and the establishment of a Digital Assets Industry Group. It also highlights the deployment of IDA Ireland and Enterprise Ireland funding to support firm-level R&D in developing initiatives in digital assets and digital transformation more generally.
Representing the private sector, Financial Services Ireland (part of IBEC), published its Strategy for 2026-2030 in February 2026. It contains a key initiative to accelerate the growth of a dynamic digital/AI and fintech sector. This includes plans to attract global AI and digital finance leaders into Ireland, and to ‘advocate for the development of a competitive ecosystem for tokenisation and securitisation.’
We are now seeing strong alignment and deep, shared commitment between the government and private sector to work together along a goal-driven and structured pathway to develop the digital FS sector.
Turning to the Central Bank, its discussion paper on DLT and Tokenisation (DP12) provides essential reading on Irish-specific considerations, practical challenges and evolving Central Bank thinking. In a subsequent blog post in April 2026 on future-proofing Europe’s financial system, Governor Makhlouf observed that:
[a]dvances such as distributed ledger technology (DLT) and tokenisation are creating the potential for greater speed, efficiency, and transparency with potentially transformative effects on the structure of our economies that are difficult to foresee today."
The development of tokenisation also dovetails with EU-level initiatives to boost the growth and competitiveness of the single market. These include the Savings and Investments Union and the advancing simplification and burden reduction agenda.
Despite increased EU and Irish regulatory support for DLT and tokenisation, however, supervisors consistently highlight the need for effective risk management. Operational and cyber resilience, as well as robust governance and oversight of critical service providers are two important focal points highlighted by the Central Bank in DP12. Market participants innovating through tokenisation will need to manage these considerations carefully.
Legal and regulatory clarity
Domestic legislative frameworks need to be reviewed and updated as necessary to ensure they are sufficiently flexible to accommodate future tokenisation models. It will also be important to shore up the legal status of facilitative technology such as smart contracts.
The Central Bank acknowledges in DP12 that:
[w]hile tokenisation does not change the legal or economic substance of financial instruments, it may change the way in which legal claims are represented, reconciled and operationalised across market participants."
It highlights smart contracts in this context, which offer automated execution and settlement of tokenised assets. Smart contracts have a range of potential applications for tokenised fund products and tokenised debt/securitisations. However, as in many other jurisdictions, the legal status of smart contracts in Ireland needs to be clearly defined. Key areas requiring clarity include enforceability, liability and recourse where operational or coding errors occur.
Separately, the funds industry has been advocating for certain targeted, technology-neutral updates to existing legislation to best position Ireland as a leading jurisdiction for tokenised solutions. These include adjustments to the Irish Collective Asset-management Vehicles Act 2015 and the Companies Act 2014. Following constructive discussions between the funds industry and the Department of Finance earlier this year, the Government sent a significant signal of support for legislative reform in the Ireland for Finance Strategy 2026, which stated:
The Government is committed to supporting the development of tokenisation of investment funds thereby fostering innovation. In this context an examination of relevant domestic legislation, including the Irish Collective Asset Management Vehicle Act (ICAV Act) and the Companies Act, has begun with a view to the modernisation of the legislation where needed."
The road ahead?
Ireland’s leading position for both SPVs and investment funds creates a strong platform which asset managers, both new and established, can look to leverage.
- The Irish SPV, in particular the Section 110 / DAC, represents a highly attractive and well-established tool for a variety of capital markets, structured and asset finance transactions. There were 3,997 active Irish SPVs at the end of Q2 2026. The quarter also saw substantial asset growth, with total assets increasing by €65 billion to €1,343 billion.
- Similarly, the Irish funds sector is the third-largest fund domicile globally, servicing over €7.3 trillion in total domiciled and non-domiciled assets. Ireland is also the largest location for regulated MMFs in Europe, and holds a 75% share of the total European ETF market.
Gazing into the future, we could see Irish Section 110 SPVs using smart contracts to issue natively tokenised debt to support a range of financial transactions using public or private blockchains. This could include native securitisations and the issuance of digital bonds.
For Irish investment funds, we would expect to see more tokenised share class launches in the near future utilising a ‘digital twin’ model. Beyond that, a broader expansion of tokenised fund products could follow, including natively issued share classes and further portfolio-level tokenisation. In due course, full on-chain settlement may also become viable. Under this model, both the shares and the underlying assets would be tokenised and settled on-chain, delivering a fully digital end-to-end ecosystem.
Comment
With market momentum already underway, Ireland is actively cementing its position as a prime European launchpad for institutional digital asset innovation. Recent market developments have proven that tokenisation is now graduating from theory into practice, and is on a pathway to becoming an established component of Ireland’s financial services toolkit. We expect increased uptake and further exploration of tokenised products in the near future, buoyed by significant Government commitment, and the delivery of optimised legislative frameworks.
If you have questions on the contents of this article, please contact a member of our Structured Finance & Securitisation or Investment Funds teams.
The content of this article is provided for information purposes only and does not constitute legal or other advice.