EU financial regulator targets AI and tokenisation in new supervision drive

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, recently launched a new Union Strategic Supervisory Priority (USSP) to help embrace innovation while protecting investors and maintaining strong safeguards. The digital innovation USSP aims to ensure supervisors have the expertise and capacity to oversee the use of new technologies. In collaboration with National Competent Authorities, the initial focus of the initiative will be on how supervised entities use artificial intelligence and tokenisation. The watchdog will remain flexible to address future technological developments as they emerge across the bloc’s financial sector. The new priority will run alongside the existing USSP on cyber and operational resilience, which has been in place since 2025. Going forward, authorities will continue their efforts and coordination to address the challenges ahead, including those emerging from advanced models such as frontier artificial intelligence. This year, ESMA is also concluding the USSP on ESG disclosures, following its launch in 2023. Indeed, the regulator has made strong progress in improving ESG disclosures and helping investors better understand sustainability information and receive quality advice. While this marks a significant milestone for European financial markets, sustainability and ESG reporting remain a long-term journey for regulators and investors alike.