Digital Token Identifier (DTI) Foundation February 2023 Regulatory Updates

Digital Token Identifier (DTI) Foundation February 2023 Regulatory Updates

Table of Contents

EU Regulatory Update

1. EU’s Digital Finance Package 

In September 2020, the EU introduced its Digital Finance Package with the objective of making the EU fit for a digital age. The package included:

· a digital finance strategy;
· a legislative proposal on digital resilience, known as Digital Operational Resilience Act (DORA);
· a legislative proposal on crypto-assets, known as Markets in Cryto-Assets (MICA) Regulation;
· a Regulation on a pilot regime for distributed ledger technology (DLT) market infrastructure.

The digital finance strategy sets out four main priorities:

· removing fragmentation in the Digital Single Market;
· adapting the EU regulatory framework to facilitate digital innovation;
· promoting a data-driven finance;
· addressing the challenges and risks with digital transformation, including enhancing the digital operational resilience of the financial system.

Link: Digital finance package (


2. EU Markets in Cryto-Assets (MiCA) Regulation

The European Commission (EC) first issued a proposal for a new regulation which would set transparency and disclosure requirements for the issuance and admission to trading of crypto-assets in September 2020 under its Digital Finance Package. MiCA establishes harmonised rules for crypto-assets at EU level, providing legal certainty for crypto-assets not covered by existing EU legislation.

MiCA identifies ‘cryptoassets’ broadly as “a digital representation of a value or a right that uses cryptography for security and is in the form of a coin or a token or any other digital medium which may be transferred and stored electronically, using distributed ledger technology or similar technology” and captures:  

· asset-referenced tokens (ART),
· electronic money (‘e-money’) tokens (EMT), and
· other crypto-assets not covered by existing EU law.

EU policymakers are expected to finalise the MiCA Regulation (Level 1) by end of Q1 2023, with MICA coming into force in Q3/Q4 2024.



3ESMA Recommends DTI for EU Distributed Ledger Technology (DLT) Pilot

On 27 September 2022, ESMA published its report on the DLT Pilot which launches on 23 March 2023. In the report, ESMA recommends that EU regulators require the DLT market infrastructures to use the DTI (page 54).

ESMA has subsequently issued Q&A on the DLT Pilot Regime. On 3 February 2023, ESMA updated these Q&A (first published on 16 December 2022) recommending that trading venues, investment firms and approved publication arrangements (APAs) complement the ISIN by including the Digital Token Identifier (DTI) when publishing post-trade information under Table 3 of Annex I of RTS 1 (equity and equity-like instruments), and Table 2 of Annex II of RTS 2 (for non-equities).

The DTI Foundation welcomes ESMA’s recognition of the DTI and the important role it plays in bringing transparency and clarity to DLT and the wider digital asset markets.

· ESMA report on the DLT Pilot regime Sep_2022
· ESMA Q&A on DLT Pilot Feb 2023
· Etrading Software | ESMA recommends use of DTI codes for Digital Asset Regulatory Reporting


4. EU Digital Operational Resilience Act (DORA)

The Digital Operational Resilience Act (DORA) aims to harmonise provisions relating to digital operational resilience across the EU financial sector with particular focus on managing ICT-related risks and incidents.

DORA entered into force on 16 January 2023 and applies from 17 January 2025. The European Securities Authorities (‘ESAs’ – ESMA, EBA and EIOPA) will need to deliver technical standards to the European Commission (EC) in early 2024. On 6 Feb 2023, the ESAs held a virtual public event to hear industry participants’ initial views and potential concerns/areas of attention on rules the ESAs will need to deliver to the EC.

On 14 February, ESMA published the Securities and Markets Stakeholder Group’s (SMSG) advice to ESMA on potential practical challenges regarding the implementation of DORA.

· DORA Legislation Level 1
· ESMA22-106-4405 SMSG advice on DORA (



UK Regulatory Updates


5. FCA/Bank of England Joint Data Transformation Programme

In 2021, the FCA and BoE started their multi-year Joint Data Transformation Programme with the vision to …”get the data they need to fulfil their mission, at the lowest possible cost to industry” The BoE and FCA have set up a multi-year, multi-phased, transformation programme with 3 key reforms in mind:

· Defining and adopting common data standards that identify and describe data in a consistent way throughout the financial sector. These common standards should be open and accessible for use by all who need them.
· Modernising reporting instructions  to improve how reporting instructions are written, interpreted and implemented. There are a range of steps involved, from setting up better Q&A processes to potentially rewriting instructions as code.
· Integrating reporting  to move to a more streamlined, efficient approach to data collection. This reform includes making data collection more consistent across domains, sectors and jurisdictions, and designing each step in the data collection process with the end-to-end process in mind.

In November/December 2022, EY, commissioned to perform a data standards review on further development and adoption of standards under this programme, asked a series of questions to which the DTI Foundation responded,  advocating  the use of ISO as a universal template for international financial services standards.  EY will share its report with industry following its review.



6. HMT: Future Financial Services Regime for Crytoassets Consultation

1 February 2023:  HM Treasury (HMT) has published a paper consulting on its plans to regulate cryptoassets  used within financial services, given that most cryptoasset activities are not currently subject to broader financial services regulation in the UK. Using the principle of “same risk, same regulatory outcome”, HMT intends to put in place commensurate safeguards where cryptoassets present similar risks to traditional financial instruments. The consultation closes on 30 April 2023.

Link:  Future_financial_services_regulatory_regime_for_cryptoassets_vP.pdf (


7. Updated UK Regulatory Initiatives

28 February 2023: The updated UK Regulatory Initiatives Grid has been published, setting out the planned activity coming down the UK financial services regulatory pipeline over the next 18 to 24 months

The Financial Services Regulatory Initiatives Forum is made up of representatives from the Bank of England, FCA, PRA and Information Commissioner’s Office among others, with HM Treasury as an observer member. The Grid was last updated in May 2022 with the second 2022 publication delayed due to the UK Government’s ‘Edinburgh Reforms’ announcement in December 2022. The Grid is usually updated and published twice p/a.

Regulatory initiatives related to ‘Payments and cryptoassets’ are listed from pages 34 to 41.

Link:  Regulatory Initiatives Grid – February 2023 (


APAC Regulatory Updates


8. Australian Government: Token Mapping Consultation Paper

3 February 2023: The Australian Government has published a consultation paper seeking feedback on token mapping, described as “the process of identifying the key activities and functions of products in the crypto ecosystem and mapping them against existing regulatory frameworks.” This is the first step towards the Australian Government’s planned and future crypto ecosystem initiatives. The consultation closes on 3 March 2023.

Link: Token Mapping Consultation Paper (


9. HKMA Conclusion to Paper on Cryptoassets and Stablecoins 

31 Jan 2023: Hong Kong Monetary Authority (HKMA) has released the conclusion of its consultation on cryptoassets and stablecoins, proposing to bring certain activities relating to stablecoins within the regulatory perimeter. Regulatory implementation is expected in 2023/2024 and HKMA notes a more detailed consultation will be conducted ‘in due course’.


Link: Hong Kong Monetary Authority – Conclusion of discussion paper on crypto-assets and stablecoins (


10. HKSAR Government Launches World’s First Government Tokenised Green Bond Offering

16 Feb 2023: The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the HKSAR Government) announced it offered HK$800 million of tokenised green bond under the Government Green Bond Programme. This is the first tokenised green bond issued by a government globally. The tokenised green bond was issued using DLT – Goldman Sachs’ tokenisation platform – GS DAPTM.  Both the bond leg and the payment leg were tokenised, the latter using HKD cash tokens.

The DTI Foundation is delighted to see DLT being embraced by a government as part of its green initiative and has issued the digital token identifier (DTI) for this bond (5D6VM7JLW).



Hong Kong Monetary Authority – HKSAR Government’s Inaugural Tokenised Green Bond Offering (

Hong Kong Monetary Authority – Eddie Yue on Tokenised Bond: Huge Potential to be Unlocked (



Global Regulatory Updates


11. FSB Proposed Framework for International Regulation of Cryptoasset Activities

Jan 2023: The Financial Stability Board (FSB) has published public comments on its website, received in response to its consultation on its proposed framework for the international regulation of cryptoasset activities. The consultation ran from Oct 2022 to December 2022 and described the key issues and challenges the FSB sees in developing a comprehensive and consistent regulatory approach that captures all types of cryptoasset activities that could give rise to financial stability risks. It also set out the FSB’s proposed approach for establishing a comprehensive framework. The DTI Foundation agrees with the FSB’s recommendations and responded to question 8 of the consultation: “Have the regulatory, supervisory and oversight issues and challenges as relate to financial stability been identified accurately? Are there other issues that warrant consideration at the international level?” noting that the Digital Token Identifier (DTI) can help with the following recommendations:


Recommendation 1: by providing a common international tool to uniquely identify digital assets;
Recommendation 3: by facilitating efficient and consistent information sharing between the authorities;
Recommendation 6: : by providing authorities with access to quality reference data on crypto assets; and
Recommendation 8: : by providing a link between crypto assets and traditional securities through a link to ISINs and Legal Entity Identifiers (LEIs) to simplify linkage of the different identifiers by market participants and public authorities.


The FSB plans to publish the final report in July 2023.


Link: Public responses to FSB’s Proposed Framework for International Regulation of Crypto-asset Activities – Financial Stability Board


Disclaimer: The content of this Regulatory Update is for general information only and does not constitute legal or other professional advice.

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