Book entries are a way to represent securities through registry entry instead of physical certificates: the holder is a holder because they are recorded in a register. Ley 6/2023 allows that register to be kept using distributed technology systems, with an entity responsible for the registration and record-keeping instead of the traditional chain.
What problem gave rise to book entries
For a long time, being the holder of a security meant having a paper. That model worked while volumes were small, but it becomes unmanageable when millions of securities have to be moved, safeguarded and settled: the paper gets lost, is forged and, above all, forces a physical transfer every time it changes hands.
Book entry resolves that with a simple idea: the security stops being in a document and is held in a register. You are a holder because you are recorded, and transfer occurs by registration, not by delivery.
What that form of representation implies
Representation through book entries has consequences that are not only operational:
- Registration is constitutive of ownership: whoever appears in the register is the holder vis-à-vis third parties.
- The transfer operates by book transfer, not by delivery of a document.
- It is irreversible in practice: once the transfer is registered, undoing it requires a new registry operation, not canceling the previous one.
- It requires an entity to keep the register and be responsible for maintaining it.
That last point is the relevant one for what comes next: the model has always needed someone in charge of the register.
What changes with distributed ledger technology
When the register is kept using systems based on distributed ledger technology, the legal logic does not change: you are still a holder by being recorded. What changes is the infrastructure on which that register is kept and who operates it.
Ley 6/2023 expressly provided for this possibility and created for that purpose the figure of the entity responsible for registration and record-keeping. It is the piece that functionally replaces the traditional chain of entities: an identifiable party who is responsible for ensuring that the register reflects reality.
The comparison that helps explain it
| Traditional book entry | Registry via DLT | |
|---|---|---|
| What evidences ownership | Registry entry | Registry entry |
| Who maintains the register | Central depository and participating entities | Entity responsible for registration and record-keeping |
| How it is transferred | Book-entry transfer | Registration in the system |
| Nature of the security | The one corresponding to the instrument | The same: the medium does not alter it |
The most widespread misunderstanding
It is often said that distributed technology eliminates intermediaries and, with them, the need for a responsible register. In the field of transferable securities, it does not work that way: precisely because registration determines ownership, the regulation requires an entity to be accountable for it.
Put another way: what technology can simplify is operations, not responsibility. Someone must be accountable for the register being correct, and that is not a leftover from the old model: it is what gives the holder legal certainty.
Why it matters before issuing
If an issuance is going to be represented through this route, it should be decided from the design stage and not as a later addition: it conditions the issuance documentation, the relationship with the entity that maintains the register, and how investors will be able to transfer afterwards. It is a structural decision, not a technological one.
Frequently asked questions
What are book entries?
They are a way of representing securities by registration in a register instead of physical certificates. The holder has that status because they are recorded as such, and transfer occurs by book-entry transfer, not by delivery of a document.
Who maintains the book-entry register?
In the traditional model, the central securities depository and participating entities. When the register is maintained through systems based on distributed ledger technology, Ley 6/2023 assigns that function to the entity responsible for registration and record-keeping.
Can securities be represented using blockchain in Spain?
Yes. Ley 6/2023 expressly allows transferable securities to be represented through systems based on distributed ledger technology. The legal logic does not change: you are still the holder by being recorded as such, and what changes is the registry infrastructure and who is responsible for maintaining it.
HokenFi is a software and infrastructure provider; it does not provide regulated services (CASP, ESI, EAF, or ERIR). This article is informative and does not constitute financial or legal advice.
