(April 21): Digital finance providers want a carve-out from forthcoming European legislation governing distributed ledger technology, arguing that Europe is losing out to the US.
Boerse Stuttgard Group, Nasdaq Inc and fintech associations from France, Spain, Italy, Hungary and Poland are among 39 signatories asking the European Commission and the European Parliament to fast track a review of the DLT pilot regime as standalone legislation, carving it out from the European Union’s Market Integration and Supervision Package.
Distributed ledger technology, which powers cryptocurrency, is increasingly part of mainstream financial services and forms part of the new EU’s regulatory push.
The signatories call for a “quick fix” of the so-called DLT pilot regime, in place since 2023, which allows market participants to test trading and settlement of tokenised securities as shares and bonds. It is one of the 18 pieces of legislation to be reviewed under the sweeping markets supervision package unveiled by the commission last December and currently winding its way through the EU system.
Given its complexity, “negotiations are likely to be lengthy", the letter, addressed to Financial Services Commissioner Maria Luis Albuquerque, states, arguing that Europe may lose momentum in DLT adoption compared to the US.
“Supported by leading financial institutions and technology firms, the US is rapidly establishing itself as a global frontrunner in tokenised assets,” it says. “If Europe doesn’t act swiftly, it risks ceding this strategic field to others, who will set global standards instead of us.”
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The US passed the Genius Act last year, a new regulatory framework for stablecoins championed by US President Donald Trump, a move advocates say will broaden the adoption of digital assets in everyday finance.
As part of a review of the DLT pilot scheme, the signatories call for a removal of restrictions on eligible asset classes to allow all financial instruments; an increase of overall volume limits to €150 billion; and a removal of time limits on licences.
Singling out legislation for the DLT pilot regime will run counter to the ambitions presented by Commissioner Albuquerque who repeatedly called for all pieces of legislation to be adopted simultaneously.
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The commission, the EU’s executive arm, is pushing for a swift resolution of the whole package, viewing it as a key plank of its long-stalled savings and investment union plan, aimed at galvanising trillions of euros held by European savers for the economy.
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