GLOSSARY · BLOCKCHAIN & WEB3
Book-entry security
What a book-entry security is: the system whereby a security exists as a simple electronic record in a register, with no physical paper.
WHAT IS IT? · FOR DUMMIES
In the past, owning a share or a bond meant keeping a piece of paper (a certificate) in a drawer. Today that paper has almost disappeared: what you hold is an electronic record in a register, just as your money at the bank is only a number on a screen. That is a book-entry security.
You own the security because your name appears in that register, not because you hold a piece of paper. It is the mental gateway to tokenization: if we are already used to a security being a digital record, taking the leap to having that record live on a blockchain is far more natural.
WHAT IS IT? · PRO
A book-entry security is the form of representation of transferable securities through electronic accounting records, as opposed to representation through physical certificates. Its regime is set out in Law 6/2023 on Securities Markets and Investment Services (LMVSI), which governs the representation of securities by book entries and the legal effects of registration.
Registration in the accounting register produces constitutive and legitimizing effects: transfer operates through book-entry transfer, and the registered holder enjoys protection against third parties. The LMVSI has expressly incorporated the possibility of using systems based on distributed ledger technology (DLT) to maintain the accounting register of securities, which constitutes the domestic legal basis for the tokenization of financial instruments in Spain.
01 / Key points
- The security is an electronic record in a register, with no paper certificate.
- Regime in Law 6/2023 (LMVSI); registration has constitutive effects.
- The LMVSI allows the register to be maintained via DLT, the legal basis for tokenization in Spain.
- Transfer takes place through book-entry transfer, not physical delivery.