Last week the European Parliament and Council finalized the legislation for the EU’s pilot regime for tokenized securities. These are defined as crypto-assets that qualify as financial instruments, such as stocks, bonds, money market securities and funds. That’s in contrast to cryptocurrencies and stablecoins covered by the EU’s MiCA legislation. The size limits for stock issuance mean this program won’t be suitable for unicorns to raise funds other than through bonds.
The new law comes into force on 23 March 2023 for three years, with the possibility of another three-year extension. It allows some temporary exemptions to certain securities regulations.
The European Securities and Markets Authority (ESMA) has the bulk of the operational responsibilities, including authorizing DLT exchanges (DLT MTF) and settlement systems (DLT SS) or platforms that perform both tasks (DLT TSS).
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