Beyond the Hype, The Future of Digital Assets Podcast - Overview of the latest regulatory developments in Europe for digital assets

In the last couple of years, European co-legislators have worked to design a harmonised and comprehensive regime designed to both incentivise an efficient digital transformation within the Union, as well as to ensure market stability and adequate investors protection in the area of digital assets.

In this podcast moderated by Judith Bremer, associate in the financial regulatory team in Frankfurt, Emiliano La Sala, head of domestic capital markets and Fintech group coordinator in Italy, provides an overview on the current situation and the latest regulatory developments in Europe, from the DLT Pilot regime to MiCAR.

Glossary

Distributed Ledger Technology or DLT: a technology that enables the operation and use of distributed ledgers;

Distributed ledger: an information repository that keeps records of transactions and that is shared across, and synchronised between, a set of DLT network nodes using a consensus mechanism;

Consensus mechanism: the rules and procedures by which an agreement is reached, among DLT network nodes, that a transaction is validated;

DLT nodes: a device or process that is part of a network and that holds a complete or partial replica of records of all transactions on a distributed ledger;

Crypto-assets: digital representation of a value or a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;

Digital Finance Package: Package of legislative measures proposed by the European Commission in September 2020 with an aim to identify a digital finance strategy to ensuring that the EU embraces the digital revolution in the financial sector. The Digital Finance Package included three different legislative proposals, namely: (i) the Regulation on the Pilot Regime; (ii) the MiCAR; and (iii) the DORA.

Pilot Regime: The regime introduced and laid down by the Regulation (EU) 2022/858 of the European Council of 20 May 2022 for market infrastructures based on distributed ledger technology (the so-called DLT market infrastructures). In particular, the Pilot Regime is designed to enable these entities to benefit from exemptions from some specific requirements of the Union financial services legislation including, but not limited to, the provisions set forth in the CSDR, MiFIR and MiFID.

DORA: Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector. The Digital Operational Resilience Act (ie DORA) is designed to consolidate and improve the Information and Communication Technology (ICT) risk requirement throughout the financial sector to ensure that all the participants of the financial system are subject to a harmonized, level playing field to mitigate ICT risks for their operations.