European securities regulator seeks public input on blockchain technology for tokenized securities.

The European securities watchdog is seeking public input on whether there’s a need to amend its regulations to accommodate the use of blockchain technology for trading and settling securities. In its call for evidence, the European Securities and Markets Authority (ESMA) invited stakeholders across Europe for input on its Regulatory Technical Standards (RTS). 

 

ESMA invited stakeholders for preparation for the commencement of its DLT pilot.

The ESMA invited stakeholders for input in preparation for the commencement of its DLT pilot, which, if approved this year, will kick off in early 2023. The DLT RTS will be the first regulation targeting the use of the technology in the issuance, trading, and settlement of bonds, stocks, mutual funds in Europe. The region is already working on the Markets in Crypto Assets (MiCA) legislation, but this covers digital currencies and stablecoins, leaving the underlying technology mostly unregulated. If passed, the DLT law will allow EU entities to issue stocks, ETFs, and bonds in a sandbox program at first before the wider rollout. 

 

Stocks and ETFs will be limited to $565 million.

Stocks and ETFs will be limited to $565 million, bonds will have a $1.1 billion limit, and corporate bonds will be capped at $225 million. The overall limit for any financial market infrastructure will be capped at 10.2 billion USD. The ESMA-proposed regulations will cover such areas as equity and non-equity transparency, provision of data and double volume cap, and data reporting requirements. It will also include ways in which DLT users will provide regulators with access to information on transactions, transparency data, and financial instruments’ reference data.