EU launches blockchain pilot for financial markets

Mon 06 Dec 2021 ▪ 11h07 ▪ 3 min read — by Katie Donaldson

Blockchain continues to take over virtually every single facet of financial markets. Experts are pushing tokenisation through governments in order to transform stocks, bonds, and many other investment vehicles.

EU promotes distributed ledger technology 

This time the European Union has confirmed that a blockchain pilot programme will be passed in either Q1 or Q2 2022. The programme will allow waiving certain legal constraints in order to tokenise certain financial instruments.

Johan Van Overtveldt, chair of the European Parliament’s budget committee, explained that distributed ledger technology (DLT) will enable facilitation of access and provision of financial services. “DLT can bring a number of potential benefits in the provision of financial services, including reduced complexity, improved end-to-end processing speed, strengthened network resilience, and reduced operational and financial risks,” he added.

The programme itself is aimed at achieving a few goals. First of all, the EU is set to implement blockchain into stocks, bonds, and the EU version of mutual funds called UCITS. Pilot regime on distributed ledger technology market infrastructures is its official name.

According to the press release, there will be financial limits. For stocks, it will be up to €500 million (~£425 million), for bonds, it will be up to €1 billion (~£850 million); and for corporate bonds, it will be up to €200 million (~£170 million). Those firms which are new to the market will be subjected to the same requirements as established ones.

Companies will be able to settle their deals in central bank currencies, tokenised commercial bank money, fiat-backed stablecoins, and e-money tokens. The programme is set to last three years; the authorities will discuss its potential extension after that period is over.

The EU’s approach is likely to work better than the one the US has chosen. First of all, the authorities seem to have chosen a more relevant, investor-friendly way to legalise blockchain.
The financial market is undergoing a new wave of innovation; chances are that those who pick the correct way to approach the tokenisation of financial instruments will win the digital race.

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Katie Donaldson

I went full time crypto back in June 2018, and have never looked back. I want to help persuade as many people as possible to come and build the decentralised future! Let’s go!


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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