Governance of blockchains in securities trading

Distributed ledger technology (DLT) has been heralded as a disruptive innovation for securities markets, offering faster settlement, reduced intermediation, enhanced transparency, and automation through smart contracts. A central question, however, is whether a public, permissionless blockchain – open to all participants without central oversight – could become the standard in trading, clearing, and settlement, or whether private, permissioned systems will dominate. Public, permissionless systems are theoretically attractive due to their openness, resilience, and potential for financial inclusion. Yet, their scalability constraints, privacy challenges under regimes such as the GDPR, and fragmented governance processes could limit their practical suitability for highly regulated financial markets. Private, permissioned systems, by contrast, restrict participation to vetted actors, enabling faster consensus, compliance with regulatory obligations, and more efficient protocol adaptation. While these systems reintroduce centralisation and risks of concentrated power, they align more closely with the accountability requirements of financial supervisors. The chapter concludes that public, permissionless infrastructures are unlikely to replace intermediated financial market structures in the short term. Instead, DLT will serve as a complementary technology within existing governance frameworks, providing efficiency gains while preserving regulatory oversight and legal certainty.