ESMA to scrutinize AI and tokenization from 2027

The European Securities and Markets Authority plans to make AI, tokenization and other emerging finance technologies a supervisory priority from 2027, citing growing use by firms seeking market share. The program, called “Innovation with investor safeguards,” will examine how regulated companies deploy AI and tokenized products in core, client-facing activities rather than only back-office systems.

ESMA and national regulators across the European Union will map where firms already use or plan to use the technologies in products and processes that directly affect customers. They will begin initial checks on a subset of the most affected businesses and assess governance, data reliability and whether outcomes are aligned with clients.

The push comes as the bloc moves beyond rulemaking for crypto assets under Markets in Crypto-Assets, which came into effect on July 1, toward closer scrutiny of how tokenized finance and AI operate across securities markets. The European Central Bank has also moved further into tokenization, including plans to invest a small portion of its reserves in tokenized securities and the debut of Pontes, a wholesale platform linking DLT market infrastructure to traditional payments.