The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, published a report on the Distributed Ledger Technology Pilot Regime (DLT Pilot Regime), providing an overview of the EU market for authorised DLT market infrastructures and recommendations on how to expand participation in the Regime.
The report contains information about business models, types of DLT financial instruments offered, and technical or legal issues encountered by supervisors to date. It also analyses the types of exemptions requested by DLT market infrastructures and the conditions under which National Competent Authorities (NCA’s) have granted those exemptions (including the compensatory measures imposed to mitigate risks).
This report comes at an inflection point for the DLT Pilot Regime, which, despite an initially limited uptake, is now seeing growing interest from potential applicants. This recent momentum confirms the relevance of continued efforts to enhance the regime’s attractiveness and functionality.
To build on this momentum, ESMA presents strategic recommendations to the European Commission (EC), prepared with feedback received by NCAs and the European Central Bank (ECB), about:
- how to make the DLT Pilot Regime more attractive to the market, and
- suggested amendments to the Pilot Regime to make it permanent and allow for more flexibility in the regulatory thresholds or eligible assets depending on the risks of each business model.
These recommendations will complement the EC’s public consultation on the DLT Pilot Regime for market stakeholders, which is part of the wider consultation on the Savings and Investments Union (SIU).
Next Steps
The EC is expected to present its own report to the European Parliament and Council within three months of receipt of the ESMA Report.
Depending on the EC’s recommendations, the DLT Pilot Regime may be extended, amended, or converted into a permanent regulation. If the regime is extended, ESMA would be prepared to provide a follow-up report within the revised timeline and to continue technical engagement with all stakeholders.
Source: ESMA
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