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EU Regulation on crypto-assets

EU Regulation on crypto-assets

On the 30th of May, 2022, Regulation (EU) 2022/858 was published in the Official Journal of the EU, introducing – with an effective date of 23/03/2023 – a novel pilot regime for market infrastructures based on DLT technology. The experimentation phase will last for 6 years.

In a nutshell, the new Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLTR) seeks to facilitate the use of DLT technology in the trading and post-trading of financial instruments issued on DLT.

Unlike the proposed Regulation on Markets in Crypto-assets (MiCAR), the scope of the DLTR is limited to a specific category of crypto-assets, the so-called “security tokens”, i.e. crypto-assets (as defined in the proposed MiCA Regulation), which qualify as financial instruments.

Eligible DLT market infrastructures permitted to benefit from the temporary sandbox regime may be:

  • Multilateral DLT trading facility (DLT MTF),
  • DLT securities settlement system (DLT SSS),
  • DLT trading and settlement system (DLT TSS), which combines the activities of both a DLT MTF and a DLT SSS.

Those market infrastructures can benefit from derogations as regards certain provisions of the MiFID II, as well as the Central Securities Depository Regulation (CSDR), applicable to them.

For example, a DLT MTF would be entitled to allow the admission to trading of certain “transferable DLT securities” that are not registered with a central securities depository (CSD), while a DLT securities settlement system would be able to benefit from “lighter” regulatory (notably operational) requirements, comparing to those applicable under the CSDR (e.g. registration of securities, integrity of the issue, segregation of assets, finality of settlement).

The DLTR is a landmark Regulation, pivotal for the fulfilment of the EU’s Digital Finance Strategy, along with the other two Regulations of the relevant “Regulatory Trilogy”, i.e. the MiCAR and the Digital Operational Resilience Act (DORA).

Read More about the Regulation here: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R0858&from=EN

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