The European Securities and Markets Authority has recommended that the EU's DLT Pilot Regime be made permanent and more flexible, following an initial period of limited but growing uptake among market infrastructure operators.
The Pilot Regime, introduced in 2023, created a regulatory sandbox allowing market infrastructure operators to test blockchain-based trading and settlement systems without full compliance with existing securities law. ESMA's recommendation to the European Commission calls for adjustments to thresholds and eligible assets based on business-model risks — changes designed to attract a broader range of applicants and support more diverse tokenised securities use cases.
According to ESMA, while initial uptake was limited, the regime was attracting more potential applicants at the time of the review — a signal that regulatory certainty is beginning to draw institutional interest. The 21X licence granted by BaFin in December 2024 under the existing Pilot Regime framework was the first operational approval; ESMA's recommendation suggests the European Commission is now being asked to build on that precedent rather than treat it as a one-off experiment.
Making the regime permanent removes the uncertainty that has deterred some institutions from investing in DLT-based market infrastructure — the risk that the regulatory framework itself might not be renewed. That removal of sunset-clause uncertainty is arguably as significant as any specific threshold change.