DLT Pilot Regime

The DLT Pilot Regime is part of the Digital Finance Package that was introduced by the European Commission in 2020. The framework supports the potential of digital finance by fostering innovation and competition while mitigating risks. The Regime adopts a sandbox approach which allows for eligible firms to operate a DLT-based market infrastructure for trading and settling limited financial instruments. 

Under this regime only liquid bonds, shares, and fund units will be allowed on the DLT. The aggregate market capitalisation also may not exceed EUR 6 billion at the time of admission to trading or initial recording of a new DLT financial instrument. This regime separates itself from MiCA as it only provides a framework for the trading or settlement of transactions which qualify as financial instruments under MIFID II and therefore are true digital securities. 

Noteworthy is the application of a “sandbox” approach as the regime represents a testing environment which grants derogations from existing rules. The aim is to exempt DLT market infrastructures from requirements of the EU financial service legislation that could stifle innovation and the development of solutions for the trading and settlement of transactions in crypto-assets by means of DLT. The permission to operate DLT market infrastructure in accordance with the regime is temporary and limited to 6 years if strict requirements are met. The DLT permission will come with an “EU passport”, meaning that it shall be valid throughout the European Union. 

April 2024 European Securities and Markets Authority (ESMA)

The European Securities and Markets Authority (ESMA) published a letter to the European Commission, the Parliament, and the Council (ECOFIN) providing an interim update on the DLT Pilot Regime. 

The letter provides an update on the status of applications received by national competent authorities to date, as well as a list of challenges and opportunities identified in the first year of application.

October 2023 European Securities and Markets Authority (ESMA)

ESMA published two reports on the DLT Pilot Regime: 'Study on how financial instrument transactions are registered in various Distributed Ledger Technologies' and 'Study on the extraction of transaction data'.

July 2023 Autorité des marchés financiers

In order to ensure consistency with the provisions of the DLT pilot scheme, France recently changed its securities law with the introduction of the bearer of financial security as a shared electronic recording device. 

These changes to securities law open up the possibility of registering bearer securities in a shared electronic recording device (DEEP), such as blockchain , under the pilot regime.  

This registration can be done in two forms: as a registered financial security registered in DEEP resulting from Ordinance No. 2009-15 of January 8, 2009 (and in accordance with Ordinance No. 2017-1674 of December 8, 2017, known as blockchain), or as a bearer financial security registered in DEEP resulting from the DDADUE law under the conditions set by the pilot scheme.

June 2023 European Securities and Markets Authority (ESMA)

ESMA published a Q&A on the implementation of Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology.

March 2023 European Securities and Markets Authority (ESMA)

ESMA published Guidelines on standard forms, formats and templates to apply for permission to operate a DLT market infrastructure.

February 2023 European Securities and Markets Authority (ESMA)

ESMA updated Questions and Answers on the implementation of Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology.

December 2022 European Securities and Markets Authority (ESMA)

ESMA published Q&As on the implementation of Regulation (EU) 2022/858 of the European Parliament and of the Council  on a pilot regime for market infrastructures based on distributed ledger technology.

December 2022 European Securities and Markets Authority (ESMA)

The European Securities and Markets Authority published a Final Report including Guidelines on standard templates, forms and formats to apply for permission to operate a DLT market infrastructure.

The Guidelines include templates to be used by market participants to apply for specific permission to operate any type of DLT market infrastructure (DLT MI) under the DLT Pilot Regulation, namely: a DLT MTF, a DLT settlement system or a DLT trading and settlement system. They also include templates for the applicants DLT MIs to request limited exemptions from specific requirements under MiFIR, MiFID II or CSDR, provided they comply with certain conditions.

  • of 3

Key contacts

Write notes

Please do not save any confidential information