Crypto glossary
DLT Pilot Regime
The DLT Pilot Regime is an EU framework, in force since March 2023, letting market infrastructures trade and settle tokenised securities on blockchains.
Regulation (EU) 2022/858 created three new types of infrastructure: DLT multilateral trading facilities, DLT settlement systems and DLT trading and settlement systems that combine both. Authorised operators receive targeted exemptions from existing rules, for instance on the use of central securities depositories or intermediaries, so that tokenised shares, bonds and fund units can be issued, traded and settled on a distributed ledger. It has applied since 23 March 2023.
The regime is deliberately limited. It covers only financial instruments under MiFID II, not crypto-assets regulated by MiCA, and sets caps on the size of eligible issuers and on the total value an infrastructure can hold. ESMA and the European Commission review it periodically to decide whether to extend, adapt or make it permanent.
Uptake has been slower than expected: only a handful of infrastructures were authorised in the first years, and market participants have argued that the size caps are too restrictive for large institutions.
Example
A European exchange group obtains authorisation as a DLT trading and settlement system, letting a mid-sized company issue tokenised bonds that settle on-chain the same day.