Market Infrastructures Based on Blockchain Technology: European Regulation “Pilot Mode” Published

Published in the Official Journal of the European Union on June 2, 2022, “Regulation (EU) 2022/858 of the European Parliament and of the Council of May 30, 2022 on a pilot scheme for market infrastructures based on distributed ledger technology” weakens the existing regulatory framework to promote the development of certain financial activities using blockchain and encouraging innovation.

Simplified regulatory framework for testing distributed ledger technology

The text proposed by the European Commission as part of the digital finance legislative package establishes a transitional regulatory framework that allows market infrastructure operators to use blockchain technology to operate a multilateral trading system and/or a security token settlement-supply system.

To experiment with the use of blockchain, this innovative pilot scheme allows market infrastructures, under certain conditions, to deviate from the requirements imposed by the MiFID 2 and Finality directives, as well as the Central Securities Depository Regulation (CSDR). . Approvals and regulatory exemptions will be granted at the level of each Member State of the European Union by the competent national authority.

Necessary legislative and regulatory adjustments

The European regulation, planned for a period of 3 years (renewable once), will apply from March 23, 2023. In order to allow the introduction of the pilot scheme by this date, several legislative and regulatory changes are expected both at the national and European levels. .

The European Securities and Markets Authority should, in particular, amend the regulatory technical standards of existing rules to adapt them to the transitional regime. For their part, Member States should designate a competent national authority responsible for granting regulatory approvals and exemptions. In France, this competence can be transferred jointly to the Financial Markets Authority (AMF), the Office for Prudential Control and Dispute Resolution and the Bank of France on a one-stop basis, the Foreign Ministry specified.[1].

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