During 2026, Tokenisation has gained significant momentum across EU financial services.
The ECB’s launch of Pontes and ESMA’s analysis of tokenised equities point to a step change at infrastructure level. Yet Irish company and funds law has not kept pace with these developments, particularly with respect to legal title and shareholder registers. This article examines the key developments and considers what they mean for tokenised funds in Ireland.
This year has already seen a number of developments in the advancement of tokenisation in financial services.
On 21 September 2026, the Eurosystem launched Pontes, a solution for settling wholesale transactions in tokenised assets in central bank money. On the same day, the ECB announced preparatory work to invest part of its own funds in tokenised securities.
These announcements came less than a fortnight after ESMA published its second “Trends, Risks and Vulnerabilities” (TRV) report of 2026 on 10 September 2026. In a section on tokenised equities, ESMA observes that to date, tokenised equities have predominantly developed through “wrapped” structures that leave legal title off-chain.
It appears that EU settlement infrastructure is advancing faster than EU national company and fund laws that determine ownership.
Pontes: central bank money for tokenised transactions
Pontes is designed to enable wholesale transactions in tokenised assets to be settled in central bank money and is the first initiative under the Eurosystem’s strategic programme for tokenised finance.
It builds on the Eurosystem’s 2024 distributed ledger technology (DLT) settlement tests, in which stakeholders identified access to a risk-free settlement asset as crucial to wider adoption. Pontes will begin with a core set of services. Enhanced features and longer operating hours will be introduced gradually, with full implementation expected by 2028.
An initial group has completed onboarding. The market participants are ABANCA, BayernLB, Caisse des Dépôts et Consignations (CDC), Cecabank, Deutsche Bank, Deka Bank, DZ Bank, European Investment Bank, Kreditanstalt für Wiederaufbau (KfW), Memo Bank, NRW.BANK, Santander and Société Générale. Market DLT operators: Axiology, Cashlink, Clearstream and SWIAT. The Deutsche Bundesbank has also onboarded as a market participant, and additional participants have committed to connecting in the coming months.
In parallel, the Appia initiative is developing a blueprint for an integrated European DLT-based ecosystem, which is due by 2028.
The ECB as investor
The ECB has begun preparatory work to invest a small portion of its own funds in tokenised securities, with purchases settled in central bank money through Pontes.
The own funds portfolio is a non-monetary policy portfolio that generates income to help cover the ECB’s operating expenses, excluding those relating to its supervisory tasks.
Initial investments will focus on euro-denominated securities issued by euro-area central governments, regional governments, agencies, and European supranational institutions.
The Executive Board will set the operational details and timing once the preparatory work is complete.
ESMA & the Legal Title Gap
In its second TRV report of 2026, ESMA distinguishes between wrapped structures, in which tokens represent a claim on, or economic exposure to, underlying shares held by a trusted party, and native issuance, in which issuers tokenise their own shares directly on DLT. Wrapped structures are much more popular, while native issuance remains rare.
Wrapped structures are easier to implement because they do not require changes to issuance practices, shareholder registers or company law. However, because legal ownership remains off-chain, a token transfer does not transfer legal title. Legal title must be conveyed separately to mirror the on-chain transaction.
As a result, the advertised benefits of a DLT-based system are only partially realised, and this method introduces complexities such as additional intermediaries and counterparty dependencies.
ESMA notes that many tokenised equities use hybrid settlement, with the token transfer occurring on-chain while cash settles off-chain via conventional payment systems. This requires reconciliation across infrastructures and entails settlement risk.
ESMA outlines that Pontes is part of the EU’s proactive approach to addressing barriers to wider adoption of tokenisation, such as those mentioned above, and will be part of a package of support that includes providing greater legal and regulatory clarity and developing common standards.
Irish Money Market Funds (MMFs) and the digital twin model
The legal constraint outlined above explains the structures used in Ireland’s first tokenised fund launches earlier this year. These funds used a “digital twin” model, in which holdings are represented on-chain while the existing off-chain fund structure is maintained. Each token issued represents a share in the relevant fund, while the official shareholder register remains the authoritative record of ownership.
In each case, the register remains the legal record, and the token mirrors it. Under the Companies Act 2014, a person becomes a member of a company when their name is entered in the register of members, and a transfer of shares is effected by delivery of an instrument of transfer and registration of the transferee. The ICAV Act 2015 contains equivalent requirements: membership depends on agreement and entry in the register; the ICAV must not register a transfer without a proper instrument of transfer; and the register must record the sub-fund and share class for each member. Until these provisions are updated to accommodate a DLT-based register, a twin structure is the most straightforward route for an Irish fund.
Ireland for Finance Vision 2030
The Government’s “Ireland for Finance Vision 2030” strategy, published in August 2026, directly addresses the legislative gap, stating:
“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 Vehicles Act 2015 (ICAV Act) and the Companies Act, has begun with a view to the modernisation of the legislation where needed.”
The Department of Finance also commits to convening a Digital Assets Industry Group and to liaising with other Departments on public sector use cases for digital assets.
Key considerations
For Irish fund managers, the Central Bank has already approved tokenised share classes structured on the digital twin model, which provides a working precedent. Native on-chain registers will depend on the outcomes of the ICAV Act and Companies Act reviews, and managers should monitor these closely.
If you have any queries on the Pontes settlement solution, or on structuring or launching a tokenised share class for an Irish fund, please do not hesitate to get in touch with any of the Key Contacts listed or your usual William Fry contact.
Contributed by Conor Forde and Emily Birchall
