Table of Contents

EU Regulatory Updates

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 (

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.


The EU DLT Pilot went live on 23 March 2023, a key milestone in the EU’s Digital Finance Package.

The aim of the DLT Pilot is to develop the trading and settlement environment for tokenised securities in a controlled environment and to enable EU regulators to draw lessons in order to identify possible proposals for a suitable regulatory framework, given the current EU legislation for financial services does not cater for DLT and crypto-assets.

The DLT Pilot Regime applies to market infrastructure, in particular Multilateral Trading Facilities (MTFs) and Central Securities Depositaries (CSDs), providing a controlled environment in which to operate DLT financial market infrastructure. Under the pilot regime, there are three categories of DLT market infrastructure: (1) DLT MTFs, (2) DLT settlement systems (DLT SS) and (3) DLT trading and settlement systems (DLT TSS) – a DLT specific type of market infrastructure which combines the two services of trading and settlement. The creation of a DLT TSS is innovative, in particular, given that under the current rules, the combination of these activities by traditional market infrastructure is not permitted. However, the EU authorities recognise the potential benefits of DLT in combining trading and settlement.

Given this is a pilot scheme, there are limits on the instruments which can be traded on DLT market infrastructure and market value thresholds are in place. Broadly speaking, the DLT Pilot is limited to:

  • Shares of an issuer with market capitalisation of less than EUR 500million
  • Bonds with an issue size of less than EUR 1 billion
  • UCITS with market value of assets under management of less that EUR 500million


There are also thresholds in place to manage the scale of assets on a DLT market infrastructure:

  • DLT financial instruments on DLT market infrastructure should not exceed EUR 6 billion at the moment of admission / initial recording, of a new DLT financial instrument.
  • Where the aggregate market value of all DLT financial instruments on a DLT market infrastructure has reached EUR 9 billion, a “transition strategy” must be activated to reduce the aggregate value.


It should be noted that EU national regulators can set lower thresholds than those above if they wish.

In terms of benefits, the DLT Pilot allows for some exemptions from the EU’s MiFIR/MiFID II and CSDR regimes to make it easier for market participants to trial DLT when trading and settling tokenised securities. However, if granted any exemptions from certain MiFID II/MiFIR/CSDR requirements, the DLT market infrastructure will have to comply with certain conditions, known as ‘compensatory measures’ to meet the objectives of those requirements.

ESMA recommends DTI use in DLT Pilot as a compensatory measure

ESMA recommended that DLT market infrastructure use the ISO 24165 Digital Token Identifier standard (DTI) as a compensatory measure in its report on the DLT Pilot, published on 27 September 2022 (page 54).   In its DLT Pilot Q&A, updated on 3 February 2023, ESMA also recommends that trading venues, investment firms and approved publication arrangements (APAs) complement the ISIN by including the 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).

Next steps

ESMA is required to develop further guidelines relating to the DLT Pilot which are expected in 2025. In 2026, ESMA will prepare a report assessing the DLT Pilot Regime which will assist the EU in its proposals regarding next steps: these could range from extending the Pilot for another 3 years, extending the scope of DLT financial instruments under the Pilot, amending the Pilot Regime, terminating it or making it permanent.  


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.


On 10 March 2023, Verena Ross, ESMA’s Chair, gave a speech at a conference organised by the Italian regulator, Consob. In the speech, Ross discusses some key technological developments and the benefits and risks they bring as well as setting out the work ESMA, the other European Supervisory Authorities and national regulators, are doing in this area.

Link: ESMA50-164-7229 Verena Ross’ speech at Consob conference: “The New Frontiers of Digital Finance”, 10 March 2023 (

UK Regulatory Updates

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 responded, advocating the use of ISO as a universal template for international financial services standards. The FCA and BoE announced recently that they expect work on the resulting report to conclude ‘in the coming weeks’.

The FCA and BoE held a Town Hall event on 29 March 2023 where they provided an update on the progress of the programme and their future plans for Transforming Data Collection; the regulators will make available an overview and recording of this event. The FCA and BoE also published in March (link below) an update on the progress of the programme and the phase two use cases and the solution development for the phase one recommendations.


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 (

APAC Regulatory Updates

3 February 2023: The Australian Government 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 DTI Foundation has submitted a response to the consultation, which closed on 3 March 2023, explaining how the ISO 24165 Digital Token Identifier standard (DTI) is a potential safeguard for consumers and investors as it enables the unique identification of crypto assets and crypto networks.

Link:  Token Mapping Consultation Paper (  

31 Jan 2023: Hong Kong Monetary Authority (HKMA) 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 (

Global Regulatory Updates

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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