Clarifications regarding the upcoming entry into force of the “DLT pilot regime”

Regulation 2022/858 of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology, most commonly known as the DLT pilot regime, was adopted on 30 May 2022. The adoption of the DLT pilot regime is part of the Digital Finance Package introduced by the European Commission back in 2020 in order to foster innovation and competition in the digital finance sector.

The upcoming entry into force of the DLT pilot regime, which is set for 23 March 2023, will enable the use of the blockchain technology in trading and post-trading processes by opening up the possibility to operate a DLT market infrastructure under certain conditions, such as e.g. central securities depositaries operating on the DLT.

The DLT pilot regime will therefore allow the trading and settlement of transactions in DLT financial instruments, i.e. tokens qualifying as financial instruments within the meaning of MiFID II.

Following the adoption of the DLT pilot regime, the definition of financial instrument under MiFID II will be amended to specifically include a reference to the fact that financial instruments include instruments issued by means of DLT.

At Luxembourg level, bill of law 8055 has been introduced to adapt the legal framework to the entry into force of the DLT pilot regime. This bill of law notably aims at amending the definition of financial instruments provided by the law of 5 April 1993 on the financial sector, as amended in order to make it explicitly clear that this concept also includes financial instruments issued by means of the DLT.