Last week, the European Parliament announced an agreement with the European Council on a pilot program to allow financial markets to use blockchain. There are still a couple of significant steps before it gets the official green light, including the parliamentary vote, meaning the final approval will likely be March 2022 at the earliest. An update has been added with more details about the timescale.
Formally named the “Pilot regime on distributed ledger technology market infrastructures“, it applies to the tokenization of conventional financial instruments such as stocks, bonds and UCITS, the European version of mutual funds. Regulation of other crypto-assets such as stablecoins and cryptocurrencies is covered by the draft MiCA legislation.
Under the sandbox program, certain existing legal requirements are temporarily waved, subject to limits. For example, it can apply to a stock issuance, ETFs or UCITS up to €500m ($565m), bonds up to €1 billion ($1.1bn) and corporate bonds up to €200m ($225m) with an overall limit of €6 billion ($6.77bn) for any financial market infrastructure (FMI).
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