*** modified on Monday 29/11 at 10 pm ***
Negotiators from the European Parliament and the Slovenian Presidency of the Council of the European Union reached a political agreement on Wednesday 25 November on the proposal for a regulation establishing a pilot scheme for market infrastructures using distributed ledger technology (DLT).
This pilot scheme will allow operators of an already regulated market infrastructure, who request it, to derogate from existing EU rules (‘sandbox approach’) to operate a DLT infrastructure, the technology behind crypto-assets. This derogation will last for three years and, at the end of this period, the Commission will carry out an evaluation and may propose to abolish the derogation, extend it for three years or even make it permanent.
The following maximum transaction limits are introduced by eligible market segments to stimulate innovation without jeopardising financial stability: - €500 million for shares; - €1 billion for bonds ; - €200 million for corporate bonds; - €500 million for UCITS harmonised investment funds.
Apart from corporate bonds, these values are those requested by the EU Council (see EUROPE 12750/14). The European Parliament nevertheless succeeded in including that operators of DLT can admit new financial instruments only until their total market value reaches €6 billion (see EUROPE 12761/4).
In order to protect investors using DLT infrastructures, provisions introduce a clearly defined liability to customers for any loss due to operational failure.
In terms of supervision, the text is in line with the EU Council’s position that the European Securities and Markets Authority (ESMA) will issue a non-binding opinion on the authorisation of a DLT market infrastructure before the competent authority of the country of establishment of that infrastructure takes its decision.
The European rules will be technology neutral so as not to favour any particular operator.
The Interinstitutional Agreement will help “foster the development of successful DLT projects in the EU” and puts in place “sufficient safeguards to maintain financial stability, market integrity and a level playing field”, said European Parliament rapporteur Johan Van Overtveldt (ECR, Belgium) in a statement. (Original version in French by Mathieu Bion)