The European Securities and Markets Association (ESMA) has outlined potential amendments to make its distributed ledger technology (DLT) pilot regime permanent, despite a lacklustre market reception.
ESMA has made a series of amendment suggestions to the regime, including allowing more flexibility in regulatory threshold and eligible assets depending on business model risks.
Since its launch, three authorised infrastructures have been established within the pilot regime. CSD Prague was authorised to operate from 11 October 2024, and 21X AG from 3 December. 360X AG is not yet live, but was authorised on 29 April 2025.
The scheme has enabled experimentation with DLT-based models for trading, settlement and compliance, ESMA says, but notes that there has been “minimal live trading activity”. Over the course of ESMA’s programme, CSD Prague reported six DLT shares issues representing €11.9 million and one DLT debt securities issue of €401. 21X AG reported one DLT debt securities issue of €500 million.
ESMA states that operational and legal frictions, including a lack of interoperability and access to central bank money, have inhibited participation.
On the former, ESMA commented, “Neither CSD Prague nor 21X AG currently offer live connectivity with traditional central securities depositories, central counterparties, or real-time gross settlement systems. This lack of integration limits [their] ability to support cross-platform asset transfers, margining, and payment flows, which are essential for institutional investors operating in multi-venue, multi-asset-class environments.”
Further, without central bank money DLT platforms have to rely on credit or e-money institutions – potentially increasing counterparty and liquidity risks, the association added.
The three authorised infrastructures use varied designs and operational structures. CSD Prague uses a fully permissioned, private DLT environment with a focus on small-scale issuance. 21X AG uses a public-permissionless chain, with trading and settlement embedded on-chain.
ESMA’s suggestions will contribute to the European Commission’s (EC) consultation on the regime for market stakeholders. This, in turn, is part of the broader Savings and Investments Union (SIU) consultation.
The EC will provide its recommendations to the European Parliament within the next three months.
DLT has been increasingly used to issue debt over recent years, with a February 2025 Association of Financial Markets in Europe (AFME) report stating that €3 billion of DLT fixed income instruments were issued globally in 2024. This marked a 260% increase on 2023.
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