Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology, and amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and Directive 2014/65/EU

Summary:

Regulation (EU) 2022/858 - formally signed by the co-legislators on 30 May 2022 - introducing a pilot regime for Distributed Ledger Technology (DLT) market infrastructures. It also amends Regulation (EU) No 600/2014, Regulation (EU) No 909/2014, and Directive 2014/65/EU. This is a text with EEA relevance.

Further information:

A Distributed Ledger is a consensus of replicated, shared, and synchronised digital data geographically spread across multiple sites, countries, or institutions.

This Regulation lays down requirements in relation to DLT market infrastructures and their operators in respect of:

• granting and withdrawing specific permissions to operate DLT market infrastructures in accordance with this Regulation;
• granting, modifying and withdrawing exemptions related to specific permissions;
• mandating, modifying and withdrawing the conditions attached to exemptions and in respect of mandating, modifying and withdrawing compensatory or corrective measures;
• operating and supervising DLT market infrastructures;
• cooperation between operators of DLT market infrastructures, competent authorities and ESMA.

It amends Regulation (EU) No 600/2014 which updated earlier EU legislation on markets in financial instruments, Regulation (EU) No 909/2014 - also known as the Central Securities Depositories Regulation (CSDR) - and Directive 2014/65/EU which became known as the MiFiD 2 Directive.

The legislative initiative was tabled by the European Commission on 24 September 2020 as part of the so-called Digital Finance Package and alongside a Communication setting out a new strategy for digital finance. This strategy identified as one of its priority areas to ensure that the European Union (EU)'s financial services regulatory framework is innovation-friendly and does not pose obstacles to the application of new technologies. The proposed Regulation aimed primarily at removing regulatory hurdles to the issuance, trading and post-trading of financial instruments in crypto-asset form and for regulators to gain experience in the application of DLT in market infrastructures.

An informal agreement between the co-legislators on a compromise text for this file was reached on 24 November 2021.

Official

EUR-LEX: COM(2020)594: Proposal for a Regulation on a pilot regime for market infrastructures based on distributed ledger technology https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2020:594:FIN

EUR-Lex: SWD(2020)201: Staff Working Document accompanying the Proposal - Impact Assessment https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2020:201:FIN

EUR-Lex: SWD(2020)202: Staff Working Document accompanying the Proposal - Executive Summary of the Impact Assessment https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2020:202:FIN

European Parliament: Legislative Observatory: Procedure File for Proposal on Digital finance: Pilot regime on distributed ledger technology market infrastructures (DLT) (2020/0267(COD)) https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2020/0267(COD)

European Parliament: Legislative Train Schedule: Proposal for a Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) https://www.europarl.europa.eu/legislative-train/theme-a-europe-fit-for-the-digital-age/file-crypto-assets-2

European Commission: Publications: Digital Finance Package https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

European Commission: Press Release, 24/09/2020: Digital Finance Package: Commission sets out new, ambitious approach to encourage responsible innovation to benefit consumers and businesses https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1684

Council of the European Union: Press Release, 21/12/2021: Distributed ledger technology: member states endorse agreement reached with European Parliament https://www.consilium.europa.eu/en/press/press-releases/2021/12/21/distributed-ledger-technology-member-states-endorse-agreement-reached-with-european-parliament/

EU ESMA: News, 04/01/2022: ESMA launches call for evidence on distributed ledger technology https://www.esma.europa.eu/press-news/esma-news/esma-launches-call-evidence-distributed-ledger-technology

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Commentary and Analysis

EPRS: Briefing, March 2021: Updating the Crypto Assets Regulation and establishing a pilot regime for distributed ledger technology - Initial Appraisal of a European Commission Impact Assessment https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2021)662617

EPRS: At a Glance, March 2022: Pilot regime on distributed ledger technology market infrastructure https://www.europarl.europa.eu/thinktank/en/document/EPRS_ATA(2022)729324

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