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Digitisation in the Bond Markets
Reprinted from: LexisNexis | 02/18/2026Cadwalader special counsel Assia Damianova authored a LexisNexis Practice Note on digitisation in the bond markets.
Assia explains that "digital bonds are now legally recognised in the UK and EU, provided that the issuing structure aligns with the applicable securities regime Prospectus Regulation and/or the Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA) and that the supporting distributed ledger technology (DLT) infrastructure is covered by the relevant regulator or sandbox." She stresses practitioners "must distinguish early between native digital bonds and tokenised traditional bonds, as this choice drives property law treatment, custody and settlement risk."
The Note details UK frameworks like the Financial Services and Markets Act 2023 (Digital Securities Sandbox) Regulations 2023, which creates a sandbox regime for ‘digital securities’ and defines the Digital Securities Depository concept, and the Property (Digital Assets etc) Act 2025, which "recognises a third category of personal property for digital assets." In the EU, key resources include ESMA’s Guidance on the application of the Prospectus Regulation to crypto assets and MiCA’s definition of asset-referenced tokens (ARTs).
Assia maps the digital bond transaction lifecycle, noting that "in most digital bond structures, smart contract code operates as an execution mechanism for agreed outcomes rather than as the source of the parties’ legal rights and obligations." She flags risks in cross-border enforceability, insolvency treatment and settlement finality, plus documentation adaptations for offering memoranda, terms and conditions, trust deeds and custody arrangements.
She concludes that while the Property (Digital Assets etc) Act 2025 and MiCA provide a "useful scaffold," practitioners should "adopt a layered compliance model that simultaneously satisfies existing securities law and anticipates the evolving MiCA requirements."
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