Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology

What it is

to establish a common EU pilot regime for market infrastructures based on distributed ledger technology (DLT). PROPOSED ACT: Regulation of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: this proposal is part of the Digital Finance package, a package of measures to further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks. The digital finance package includes a new Strategy on digital finance for the EU financial sector with the aim to ensure that the Union’s financial services legislation is fit for the digital age, and contributes to a future-ready economy that works for the people, including by enabling the use of innovative technologies. The Union has a stated and confirmed policy interest in developing and promoting the uptake of transformative technologies in the financial sector, including blockchain and distributed ledger technology (DLT). The European Parliament adopted by 527 votes to 28, with 31 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology. The proposal for a regulation on a pilot scheme for market infrastructures based on distributed ledger technology (DLT) aims to provide legal certainty and flexibility for market participants wishing to operate a DLT market infrastructure by establishing uniform requirements for the operation of DLTs. The European Parliament's position adopted at first reading under the ordinary legislative procedure amends the Commission's proposal as follows: The pilot regime lays down the conditions for acquiring permission to operate a DLT market infrastructure, defines which DLT financial instruments can be traded and details the cooperation between the operators of DLT market infrastructures, national competent authorities and ESMA. The DLT pilot regime aims to test the development of the European infrastructure for trading, clearing and settlement of DLT-based financial instruments. Crypto-assets are one of the main DLT applications for finance. Distributed ledger, broadly defined, is a consensually shared database through which a transaction is validated. The concept of DLT market infrastructure comprises DLT multilateral trading facilities (DLT MTF), DLT settlement systems (DLT SS) and DLT trading and settlement systems (DLT TSS). Limitations on the financial instruments admitted to trading or recorded on DLT market infrastructure DLT financial instruments should only be admitted to trading on a DLT market infrastructure, or be recorded on a DLT market infrastructure, if, at the moment of admission to trading or the moment of recording on a distributed ledger, the DLT financial instruments are: - shares, the issuer of which has a market capitalisation, or a tentative market capitalisation, of less than EUR 500 million ; - bonds, other forms of securitised debt, including depositary receipts in respect of…

Frequently asked