EU Legal Framework For Crypto Assets And Financial Sector Resilience: Quick Update
17 November 2022
ELVINGER HOSS PRUSSEN, société anonyme
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The EU is working on setting out the legal framework for
Fintech. On a separate but connected note, the EU legislator also
addresses risks carried by technological evolutions. This paper
focuses on three pieces of legislation and legislation in
preparation for shaping the future of financial markets.
The Pilot Regime for market infrastructure based on distributed
Ledger Technology Regulation (the “EU DLT Pilot
- The EU DLT Pilot Regime provides for a temporary testing
environment offering derogations from existing rules, which
provides a legal framework for the trading and settlement of
transactions in crypto assets that qualify as financial instruments
within the meaning of MiFID II (true digital securities or security
- Through their relevant national authorities, authorised
investment firms and market operators may apply to trading on a DLT
Multilateral trading facility. Authorised Central securities
depositary (CSD) can apply for specific permission to operate a DLT
settlement system. These two groups may apply for the operation of
a combined DLT trading and settlement system, whereas new entrants
will have the option to apply for temporary authorisations as
investment firms, market operators or CSD to apply for the pilot
- Adopted in May 2022, the EU DLT Pilot Regime will enter into
force on 23 March 2023.
- On 27 September 2022, a bill of law was filed aiming at
implementing the EU DLT Pilot Regime in Luxembourg by amending the
Law of 5 April 1993 on the financial sector, the Law of 5 August
2005 on financial collateral arrangements and the Law of 30 May
2018 on markets in financial instruments. The bill of law is
currently receiving the opinions of professional chambers and
should thereafter be discussed in Parliament.
The Market in Crypto Assets Regulation proposal
- MiCA is set to regulate the market of crypto-assets and set up
obligations of registrations, authorisations, publication to the
competent authorities, governance and compliance for the issuers of
- Once adopted, the Regulation will apply to all natural and
legal persons and other undertakings that are engaged in the
issuance, offer to the public and admission to trading of crypto
assets or that provide services related to crypto assets in the
Union. However, the Regulation will not apply to crypto assets
qualifying as financial instruments under MiFID I and to UCITS
- The European Parliament approved the current text of MiCA on 10
October 2022. The legislative procedure will continue through 2023.
Formal adoption is expected in 2024-2025.
The Digital Operational Resilience for the financial sector
Regulation proposal (“DORA”)
- DORA sets out rules for financial entities, including full
responsibility of the management body in ICT risks, the requirement
to set up, maintain and test resilient ICT systems and tools or the
requirement to report to the competent authorities only deemed
major ICT-related incidents.
- All investment firms, managers of alternative investment funds,
management companies and multiple other financial entities
regulated at EU level will fall under DORA’s scope of
- The Council of the European Union and the European Parliament
are discussing the proposal in first reading under the ordinary
legislative procedure. Formal adoption is expected in
Once adopted, the Regulations will be directly applicable across
the European Union.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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