DLT Pilot Regime Heads for Reform: What's Changing for Intermediaries and Businesses
After three years of limited adoption, the EU pilot regime for DLT-based market infrastructures (Regulation (EU) 2022/858) is heading for reform. The Commission's proposal of 4 December 2025 (MISP package) expands its scope and thresholds and makes the regime permanent. Analysis of the impacts for intermediaries and businesses.
— Studio LX20 Law Firm
MISP package, Commission proposal of 4 December 2025 — the first comprehensive review of the EU pilot regime for market infrastructures based on Distributed Ledger Technology (Regulation (EU) 2022/858). Operational implications for authorisation applications, for structuring tokenisation transactions, and for due diligence on fintech projects.
The case, in brief
The European pilot regime for market infrastructures based on distributed ledger technology (Distributed Ledger Technology, DLT) is undergoing a transformation. After three years of modest adoption, on 4 December 2025, the European Commission presented—as part of the Market Integration and Supervision Package (MISP)—a proposal for a regulation that substantially reforms the DLT Pilot Regime: it expands its scope, raises its thresholds, and removes its temporary nature.
The proposal is not yet law: it is the first step in a legislative process that will continue throughout 2026 and 2027. But the direction is clear and addresses the main criticisms raised by operators about a regime that, to date, has produced disappointing results.
The starting framework
The DLT Pilot Regime was established by Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology. It is part of the Digital Finance Package presented by the Commission in September 2020, alongside Regulation (EU) 2023/1114 on Markets in Crypto-Assets (Markets in Crypto-Assets Regulation, MiCAR) and Regulation (EU) 2022/2554 on digital operational resilience (Digital Operational Resilience Act, DORA).
It is, in essence, a regulatory sandbox: a controlled environment that allows authorised operators to experiment with the issuance, trading, and settlement of financial instruments in tokenised form, benefiting from temporary exemptions from certain requirements otherwise applicable under Directive 2014/65/EU (Markets in Financial Instruments Directive, MiFID II), Regulation (EU) No 600/2014 (MiFIR), and Regulation (EU) No 909/2014 on central securities depositories (Central Securities Depositories Regulation, CSDR). The regime has been applicable since 23 March 2023.
The scope is limited to crypto-assets that qualify as financial instruments under MiFID II (so-called "DLT financial instruments"); crypto-assets governed by MiCAR are excluded. The Regulation authorises three types of infrastructure: the DLT multilateral trading facility (DLT multilateral trading facility, DLT MTF), the DLT settlement system (DLT settlement system, DLT SS), and the DLT trading and settlement system (DLT trading and settlement system, DLT TSS).
At the national level, the framework was aligned by Law-Decree No. 25 of 17 March 2023 (the Fintech Decree), converted with amendments by Law No. 52 of 10 May 2023, which designated the National Commission for Companies and the Stock Exchange (Consob) and the Bank of Italy as the competent authorities.
A slow start
The most significant fact of the first few years is the modest adoption. In the report by the European Securities and Markets Authority (ESMA), which covers the period up to 31 May 2025, only three infrastructures have been authorised: CSD Prague, as a DLT SS since 11 October 2024; 21X AG, as a DLT TSS since 3 December 2024; and 360X AG, as a DLT MTF since 29 April 2025. The actual trading activity has remained limited.
The reasons are structural. As early as April 2024, ESMA had chosen not to publish the annual interim report required by Art. 15 of Regulation (EU) 2022/858, due to the absence of authorised infrastructures, replacing it with a letter addressed to the Commission, the Parliament, and the Council. In April 2025, the Italian and French supervisory authorities (Consob and the Autorité des Marchés Financiers, AMF) published a joint paper with proposals to make the regime more competitive.
Among the recurring obstacles reported by operators were: uncertainty about the duration of the regime, which discouraged infrastructure investments with no prospects beyond 2026; the size thresholds for eligible instruments and, above all, the aggregate cap of €6 billion per infrastructure (with an obligation to activate a transition strategy upon reaching €9 billion), deemed too low to generate a return on investment; difficulties in settling the cash leg (the cash payment); and interoperability issues with traditional market infrastructures.
The ESMA report and the Commission's proposal
Art. 14 of Regulation (EU) 2022/858 requires ESMA to submit a report to the Commission by 24 March 2026 on the functioning of the regime, its costs and benefits, and a recommendation on whether to continue it. ESMA brought this forward by publishing the report on 25 June 2025, with an overall favourable assessment and the recommendation to make the regime permanent, introduce graduated and flexible thresholds, expand the eligible assets, and reduce the burden on smaller operators.
Based on these recommendations, and in line with the Savings and Investments Union (SIU) strategy, the proposal of 4 December 2025 addresses four areas:
- Expansion of scope. The regime would cover all financial instruments under Annex I, Section C of MiFID II, including structured financial instruments, thus overcoming the current limitation to shares, bonds and other forms of securitised debt, money market instruments, and units in UCITS.
- Removal of caps. The thresholds per instrument would be eliminated, and the aggregate cap per infrastructure would be raised from €6 billion to €100 billion. A simplified regime would apply to DLT SS and DLT TSS operators with aggregate activity below €10 billion.
- Permanent nature. The time limits on individual authorisations would be removed, overcoming the regime's temporary, experimental nature.
- Expansion of participants. In addition to investment firms and market operators, as well as central securities depositories, access would also be granted to operators of an organised trading facility (OTF)—with the DLT MTF category being renamed 'DLT trading venue'—and crypto-asset service providers (CASPs) authorised under MiCAR to operate a crypto-asset trading platform.
The ongoing legislative process
The proposal is the first step in a long process. On 12 June 2026, the European Parliament's Committee on Economic and Monetary Affairs (ECON) published the draft reports on the MISP package; the deadline for other members to table amendments is set for 16 July 2026, with a vote on the negotiating position scheduled for the meeting on 1 December 2026. This will be followed by interinstitutional negotiations (trilogues) between the Parliament, the Council, and the Commission, expected between the second half of 2026 and the first half of 2027. Estimates for its actual entry into application range from 2027 to 2029, with possible transitional periods.
As this is a proposal still under discussion, the text is subject to potentially significant changes during the process: the information provided above does not constitute current law but indicates the direction the European legislator is taking.
What this means in practice
For intermediaries and market infrastructures. The direction is clearly favourable for those considering entry: higher thresholds, a broader scope, a stabilised regime, and openness to new categories of operators. However, the caution typical of the legislative phase remains: until final adoption, any investment decision is subject to uncertainty about the final framework. Those intending to apply for authorisation today must operate under the current regime—with its existing caps—and will need to prepare a detailed business plan, investor protection measures, and an exit strategy, while addressing the cash settlement and interoperability aspects that experience has shown to be critical.
For businesses, particularly small and medium-sized enterprises. The regime was also designed to facilitate alternative financing channels through the tokenisation of financial instruments. The raising of the caps and the expansion of eligible assets, if confirmed, would significantly broaden the scope for fundraising on DLT infrastructures, which is currently constrained by the existing thresholds. At present, however, the opportunity remains largely prospective: the authorised ecosystem is limited, and actual accessibility will depend on the outcome of the legislative process and the availability of operational infrastructures.
Our observations
2026 marks the transition of the DLT Pilot Regime from a temporary experiment to a candidate for a stable infrastructure in the European capital markets. The Commission's proposal addresses the main criticisms from operators, but the final word rests with the co-legislators, and the timeline is not short. For intermediaries and businesses, the message is twofold: on the one hand, to monitor the process to position themselves in a timely manner for the authorisation windows that will open; on the other, not to underestimate that the current regime involves significant set-up costs and relevant legal and technical complexities, requiring careful structuring of tokenised instruments under the applicable national law.
The Firm assists intermediaries, market infrastructures, and businesses in assessing the feasibility of DLT projects, preparing authorisation applications, and legally structuring tokenised financial instruments. For an analysis tailored to your specific operational model, please contact us.
This contribution is for informational purposes only and does not constitute legal advice or an investment solicitation. The information is current as of the date of writing; the ongoing legislative process may lead to significant changes.