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ESMA, the EU’s financial markets regulator, will launch a new Union Strategic Supervisory Priority (USSP) on digital innovation from 2027. Working with national supervisors, the initial focus will be on how supervised entities use artificial intelligence and tokenisation. The priority will run alongside the existing USSP on cyber and operational resilience, in place since 2025.
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, will launch a new Union Strategic Supervisory Priority (USSP) on digital innovation from 2027, aiming to help embrace innovation while protecting investors and maintaining strong safeguards. The initial focus, developed in collaboration with National Competent Authorities, will be on how supervised entities use artificial intelligence and tokenisation, ESMA said in its announcement.
The digital innovation USSP is designed to ensure that supervisors across the EU have the expertise and capacity to oversee the use of new technologies by firms under their supervision. According to ESMA, the priority aims to strike a balance between enabling technological innovation in financial markets and preserving investor protection and market integrity. The regulator stated it will remain flexible in order to address future technological developments as they emerge, rather than confining the priority’s scope to the technologies named at launch.
ESMA said its work under the new priority will be carried out in collaboration with National Competent Authorities, the national regulators responsible for day-to-day supervision of financial firms in EU member states. The two named areas of initial focus — artificial intelligence and tokenisation — reflect technologies already being adopted or tested by supervised entities in securities markets.
The new priority will run alongside the USSP on cyber and operational resilience, which has been in place since 2025. ESMA added that it will continue its efforts and coordination to address challenges ahead, including those emerging from advanced models such as frontier AI.
What the New Priority Means for EU Markets
The announcement signals how EU securities supervision will be organised from 2027: supervisory attention and resources will be deliberately directed at how firms deploy AI and tokenised financial instruments. For banks, investment firms, trading venues and other supervised entities, this means their use of these technologies is likely to face more structured and coordinated supervisory scrutiny across member states.
USSPs are ESMA’s convergence tools for addressing high-risk areas of strategic importance across the EU, according to the regulator. They help direct supervisory resources towards the risks that matter most for investor protection, financial stability and the orderly functioning of EU financial markets. By designating digital innovation as a USSP, ESMA is treating technology adoption by financial firms as a strategic, Union-wide supervisory risk rather than a matter for individual national approaches.
The focus on AI also places ESMA’s supervisory agenda in step with wider EU regulatory activity around artificial intelligence, while the tokenisation focus reflects growing experimentation with distributed ledger technology in securities issuance, settlement and trading. ESMA has not yet detailed the specific supervisory actions the new priority will involve.
How This Fits ESMA’s USSP Timeline
ESMA’s USSP framework directs coordinated supervisory attention to selected priority areas for a defined period. The USSP on cyber and operational resilience has been in place since 2025 and will continue running alongside the new digital innovation priority from 2027.
The USSP on ESG disclosures, launched in 2023, is being concluded this year, according to ESMA. The regulator said it has made strong progress in improving ESG disclosures and helping investors better understand sustainability information and receive quality advice. ESMA described the conclusion as a significant milestone but added that ESG remains a long-term journey, indicating that sustainability-related supervisory work will continue outside the formal USSP structure.
ESMA published a factsheet presenting key information on ongoing and future USSPs alongside the announcement.
“The digital innovation USSP aims to ensure supervisors have the expertise and capacity to oversee the use of new technologies.”
— ESMA announcement
Details Still to Be Defined
ESMA’s announcement sets the direction and timing of the new priority but leaves several operational questions open. The regulator has not yet detailed the specific supervisory actions, methodologies or expectations that will apply to firms using AI or tokenisation under the USSP.
It is also not yet clear how long the digital innovation USSP will run, how its scope may evolve beyond the initial focus areas, or what thresholds or criteria will determine which entities and use cases receive attention first. The division of work between ESMA and individual National Competent Authorities has been described in terms of collaboration but not yet spelled out in operational detail.
The extent to which the priority will produce formal guidance, thematic reviews or supervisory expectations for market participants is expected to become clearer closer to the 2027 launch.
The Road to the 2027 Launch
Between now and 2027, ESMA and National Competent Authorities are expected to develop the operational framework for the digital innovation USSP, including how supervisory expertise on AI and tokenisation will be built and deployed. ESMA has said it will continue coordination on emerging challenges, including those linked to frontier AI models.
In the near term, ESMA is concluding the ESG disclosures USSP this year, while the cyber and operational resilience USSP continues. Firms operating in EU securities markets can expect further detail on supervisory expectations for AI and tokenisation use ahead of the 2027 start date. ESMA’s published factsheet on ongoing and future USSPs provides the current reference point for how the priorities fit together.
Key Questions
What is ESMA’s new supervisory priority on digital innovation?
It is a new Union Strategic Supervisory Priority (USSP) launching in 2027, under which ESMA and national supervisors will coordinate their scrutiny of how supervised financial entities use new technologies, starting with artificial intelligence and tokenisation.
Which technologies will ESMA focus on first?
According to ESMA, the initial focus will be on how supervised entities use artificial intelligence and tokenisation. The regulator has said it will remain flexible to address future technological developments as they emerge, including challenges linked to frontier AI models.
What is a Union Strategic Supervisory Priority (USSP)?
USSPs are ESMA’s convergence tools for addressing high-risk areas of strategic importance across the EU. They direct supervisory resources towards the risks that matter most for investor protection, financial stability and orderly market functioning.
Does the new priority replace ESMA’s existing supervisory priorities?
No. The digital innovation USSP will run alongside the USSP on cyber and operational resilience, in place since 2025. The ESG disclosures USSP, launched in 2023, is being concluded this year, though ESMA says ESG work remains a long-term effort.
What should financial firms expect before 2027?
Details on specific supervisory actions, expectations and timelines have not yet been published. Firms using AI or tokenisation can expect further clarification from ESMA and National Competent Authorities as the 2027 launch approaches.
Source: primary
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