European Securities and Markets Authority reviews the DLT Pilot Regime and recommends reforms to broaden participation and move to a permanent framework

The European Securities and Markets Authority published a report on the Distributed Ledger Technology Pilot Regime, taking stock of the EU market for authorised DLT market infrastructures and setting out recommendations to the European Commission on how to expand participation and improve the regime’s functioning. The report summarises observed business models, the types of DLT financial instruments offered, and technical or legal issues encountered by supervisors. It also analyses the exemptions requested by DLT market infrastructures and the conditions under which National Competent Authorities have granted them, including compensatory measures imposed to mitigate risks. ESMA notes that, after initially limited uptake, interest from potential applicants is growing, and proposes strategic changes including making the regime permanent and allowing more flexibility in regulatory thresholds or eligible assets depending on the risk profile of each business model. ESMA’s recommendations are intended to complement the European Commission’s public consultation on the DLT Pilot Regime within the wider Savings and Investments Union consultation. The Commission is expected to provide its own report to the European Parliament and Council within three months of receiving ESMA’s report, and may propose extending, amending, or converting the regime into a permanent regulation.