CMTA Releases Standard for the Tokenization of Debt Instruments Using Distributed Ledger Technology
The Capital Markets and Technology Association (CMTA) is pleased to announce the official publication of its Standard for the Tokenization of Debt Instruments using Distributed Ledger Technology, a document designed to support the digital transformation of capital markets in Switzerland and beyond.
This new standard provides a comprehensive, step-by-step guide to the tokenization of debt securities (bonds, notes, structured products, and other non-equity financial instruments) as ledger-based securities under Swiss law (Art. 973d et seq. of the Swiss Code of Obligations). By offering a clear legal and operational framework, the CMTA’s standard helps issuers, legal advisors, financial consultants, and company executives navigate the process of issuing debt instruments digitally on distributed ledger technology (DLT).
As interest in tokenized securities continues to grow globally, with recent offerings from major institutions such as UBS, as well as the attribution of the first DLT trading facility license in Switzerland to BX Digital, this standard arrives at an important moment. It sets out key legal considerations and regulatory requirements for issuing such instruments in Switzerland, ensuring compliance and fostering market confidence.
Opportunity for foreign issuers to benefit from Switzerland's DLT law
Importantly, the Standard explains how issuers based outside Switzerland can take advantage of the country’s clear and robust legal framework, as well as its advanced infrastructure for tokenization. It cites a legal opinion commissioned by the CMTA confirming that, where permitted by their own governing law, foreign companies may choose Swiss law to govern the tokenization process and grant jurisdiction to Swiss courts for matters related to it. This presents both an opportunity to attract new business into Switzerland and a platform for increasing the market for tokenization globally.
Key Features of the Standard
Adapted from the CMTA’s 2021 Equity Tokenization Standard, this new framework has been customized for debt instruments and includes the following key features:
- Smart Contract Requirements: Specifications for smart contract functionality aligned with the CMTA’s own CMTAT standard token framework. These smart contracts form the backbone of secure, compliant tokenized issuance
- Compliance and Investor Identification: Best practices for implementing compliance controls and restricting transfers using whitelisting and other mechanisms, ensuring that only approved participants can access and trade the instruments
- Certainty of Terms: Guidance for ensuring an instrument’s terms and conditions can be clearly and reliably determined
- Jurisdiction clauses: The standard can be applied by both Swiss and foreign issuers: the tokenization process must be governed by Swiss law, with Swiss courts having jurisdiction over the tokenization process (but not necessarily over the tokenized instrument's terms)
- Usable templates: Model tokenization terms, board approvals and corporate regulations
Developed by Industry Leaders
The Debt Tokenization Standard was developed collaboratively by CMTA’s diverse membership, which includes leading law firms, financial institutions, and technology providers. Their collective expertise has ensured that the standard is practical, legally robust, and aligned with the latest technological advancements in blockchain and digital assets.
Certification Scheme Coming Soon
Later this year, the CMTA will launch a certification scheme that will allow issuers to demonstrate compliance with the Debt Tokenization Standard. This initiative will provide market participants with an additional layer of trust and assurance when engaging in digital debt issuance.
