CSDonDLT - Tests with KDPW participants to assess the further development of the capital market

May 2026 saw the launch of the first phase of testing the CSDonDLT solution with KDPW participants.

This application of DLT technology represents a significant milestone in the evolution of capital market infrastructure and serves as the next stage in laying the foundation for the processing of digital assets within the Polish depository-settlement system. The significance of these tests extends beyond simply the validation of the functionality of the new technology - they form an integral part of a broader capital market transformation, within which DLT will emerge as a cornerstone of the future market infrastructure.

It has increasingly been acknowledged that the success of tokenization is not uniquely built on the digital representation of assets, but rather also on its capacity to manage the entire lifecycle of the financial instrument. In this respect, solutions developed within the capital market infrastructure hold greater significance by leveraging the capabilities of distributed ledger technology, while adhering to strict security, oversight, and operational accountability standards.

The global, European, and national discourse on asset tokenization is progressively and clearly moving away from technological experimentation to a discussion on the future architecture of the capital market. A growing body of research indicates that tokenization is no longer solely perceived as a means of representing assets in digital form – instead, it is emerging as a key area of development for fundamental market processes, including issuance, distribution, safekeeping, trading, settlement, liquidity management, and the use of assets as collateral.

Early narratives about tokenization predominantly concentrated on the asset itself. Discussions centred around tokenized real estate, tokenized financial instruments and other categories of property rights, which would readily become more accessible, divisible and liquid due to the arrival of DLT technology. While this direction continues to remain relevant, but has become increasingly evident that merely representing an asset in the form of a token is insufficient. The capital market not only requires a digital record of an asset but also needs a comprehensive process to be in place, including reliable record keeping, the ability to effectively transfer rights, manage payments, control authorisations, process corporate events, perform reporting and ensure the finality of settlement. Without these elements, tokenization remains limited to the technological layer; however, with these elements in place, it becomes an integral component of the new market infrastructure.

It is within this context that the current CSDonDLT tests hold particularly significance. They serve as confirmation of how DLT technology can be utilised not only to represent financial instruments, but also to facilitate the processes conducted by capital market infrastructures and their participants.

The initial phase of the CSDonDLT testing involves the fundamental components of a comprehensive asset lifecycle.

Participants are able to evaluate processes related to DLT account management, the transfer of securities from the traditional layer to the DLT layer, the operations conducted within the DLT layer itself, including OTC transactions, and the transfer of securities back to the conventional system.

This scope allows the entire lifecycle of an asset to be tested – including the creation of an account and linking it to a wallet address, to the transfer of the asset to the DLT layer and using it within that layer, and its subsequent return to the traditional record system. For participants, this implies the practical ability to verify messages, statuses, validations, whitelists, relationships between accounts and addresses, management of account balances and transfers and interaction between the traditional system and the DLT layer. This comprehensive approach allows the complete process to be assessed, as well as the quality of communication between the DLT layer and participant systems, and the scope of information required to effectively serve customers and internal processes.

Consequently, financial institutions participating in the tests can verify how the new solution integrates into their system architecture, operational procedures, customer service model and responsibilities related to the maintenance of securities accounts and operations conducted using these accounts.

An essential element of the tests is the option for participants to choose two distinct pathways. The first pathway is application-oriented and uses tools provided by KDPW, including the CSD Services application, which has been enriched with functionality tailored for CSDonDLT and the myWallet application. This pathway enables a rapid comprehension of processes and enables participants to execute significant operations without the immediate necessity of constructing their own technical integration. In practical terms, it allows for the commencement of testing without the requirement of first establishing an independent technical infrastructure and system integration at an early stage of project development. This feature is especially advantageous for business and operations teams.

The second pathway is more technical and emphasises complete integration of the solution with its own systems.

It assumes the creation of its own node in order to join the Blockchain Platform for the Capital Market. This option is crucial from the perspective of the future production provision of DLT-based services and tokenized representation of financial instruments.

The test blueprint proposed by KDPW therefore enables the gradual development of competences, without imposing a singular engagement model and uniform work pace on all participants. At the same time, it establishes a shared knowledge base that serves as the foundation for the development of DLT-based services and further applications of CSDonDLT in the national capital market infrastructure.

In a broader context, the current tests being conducted are also part of the preparations for changes taking place in the global financial market. The discussion is increasingly moving away from concerns about whether DLT technology can be utilised in the management of financial assets to the question of which institutions and infrastructures will be able to leverage its capabilities in a manner that aligns with security, regulatory and operational responsibility requirements. CSDonDLT testing is an important step in advancing such competencies both within the market infrastructure and its participants, while at the same time providing practical experience necessary for the further development of DLT-based services.