EFAMA believes that many of the barriers identified in the European Commission's Savings and Investment Union consultation on the integration of EU capital markets can be effectively addressed through Distributed Ledger Technology (DLT). This includes fragmented post-trade infrastructures, lack of competition and cross-border flows among financial market infrastructures (FMIs), and national differences in securities, taxation, and insolvency laws. By enabling new business models, disintermediation, enhanced market competition, and improved distribution, DLT offers a pathway to bypass politically sensitive obstacles in Europe's post-trade ecosystem. Given the challenges in reforming entrenched national systems, EFAMA calls on policymakers to wholeheartedly embrace DLT to promote innovation, entry of new participants, and scaled issuance, trading, and settlement—all with a view to benefiting end-investors and advancing the Savings and Investments Union.
Market participants who have engaged or are looking to engage with digital assets under the DLT Pilot Regime, are calling for a seamless transition to an updated legal framework that supports scale, competition and a more level playing field with traditional players. The pace of regulatory change in key jurisdictions outside the EU, along with the observed level of investments and growth of DLT assets, further highlights the urgency for Europe to adapt rapidly.
Tanguy Van de Werve, EFAMA Director General, commented: “A great number of European firms from across the value chain have made impressive investments in DLT, and are leading the financial sector in the digital transition. These efforts should be matched at the highest political level with a clear commitment from EU authorities to deliver on a DLT-based ecosystem. Piecemeal changes, weighed down by lengthy legislative processes, will not give the market the necessary signals for further investments. A comprehensive plan with an ambitious timeline is what is needed.”
In two papers published today, EFAMA makes the following recommendations:
Proposals on MiCA and eligibility of stablecoins
EFAMA advocates for a multipolar DLT payment ecosystem in European capital markets that allows for a plurality of options for investors and market participants to settle the cash leg of any DLT-based transaction, including the ECB’s wholesale central bank digital currency (wCBDC), tokenised deposits, commercial bank money tokens (CBMT), and MiCA-regulated crypto-assets that can be used for payment purposes. The multipolar approach promotes competitiveness and innovation while mitigating risks like over-reliance on a single mechanism, risk concentration, and potential disruptions to monetary policy.
To fully leverage the potential of DLT and enable stablecoin payments by funds, clarification of the current framework is needed to allow UCITS funds to invest in and hold MiCA-compliant e-money tokens (EMTs), whether as transferable securities or as an instrument of payment or both, recognising the hybrid nature of stablecoins.
Interpretative guidance is required on the eligibility of MiCA-regulated stablecoins in fund holdings, both as an instrument of payment and as investments.
Strengthening requirements on double issuance stablecoins, where necessary: The market for stablecoins should be open to all issuers that ensure full compliance with MiCA, with the resultant competition deemed healthy for a market in a high-growth phase. Acknowledging concerns around investor protection, especially in light of the US Genius Act, greater controls around where reserve assets are held, and more restrictions on asset type, could be considered.
Key requests on FMIs, DLT Pilot Regime, and regulatory frameworks
EFAMA urges a rethink of FMI regulations and legislation on asset issuance, registration, custody, transfer, and settlement to reflect DLT capabilities and create a level playing field for new entrants. We would welcome a move toward a new market structure where more entities are allowed to provide core infrastructure functions. A more open and competitive market structure would benefit all market participants, particularly in the issuance/ledger role and the provision of settlement services. Unbundling of CSD services would lower transaction prices for users of these services, benefiting end-investors with cost savings and aiding asset managers in delivering on their fiduciary duties.
Amend CSDR Article 3(2): Remove restrictions requiring securities to be CSD-registered for on-venue trading and financial and central bank collateral use, eliminating discrimination against tokenised assets (MiFID financial instruments) compared to traditional formats and boosting liquidity in secondary markets.
Convert and Expand DLT Pilot Regime: Make it a permanent regime, increase thresholds for asset classes, and expand eligible assets to support growth, scalability, and market efficiencies.
Areas for further exploration: The need for interoperability between CSDs and DLT registers to help support hybrid instruments that require reconciliation, strengthening passporting for DLT operators across Member States, and expanding provisions for cash settlement under CSDR to support DLT payment alternatives.
- ENDS -
Notes to Editors
Read our memo on Enabling DLT Payments & Investments here and our memo on the DLT Pilot Regime and Existing Regulatory Frameworks here.
Find out more about our work on tokenisation here.
For further information, please contact:
Hayley McEwen
Head of communications and membership development
