ESMA to Prioritize EU-Wide Supervision of AI and Tokenization from 2027
Starting in 2027, the European Securities and Markets Authority (ESMA) will focus on supervising artificial intelligence (AI) and tokenization as part of a new strategic priority on digital innovation. Across the European Union, regulators will identify emerging uses of tokenization and AI among firms and conduct targeted checks on those most impacted. The objective is to develop common supervisory approaches and build expertise amid growing use of these technologies in financial services.
ESMA’s New Priority on Digital Innovation
The European Securities and Markets Authority (ESMA) announced that from 2027 it will launch a new Union Strategic Supervisory Priority (USSP) focused on digital innovation, with an initial emphasis on artificial intelligence (AI) and tokenization. This initiative aims to align efforts of national regulators across the EU to identify and manage risks posed by these technologies in financial services.
Supervisory Approach and Risk Assessment
Under the new priority, EU supervisors will detect emerging tokenization applications and assess how firms use or intend to use AI and tokenized products or processes that affect investors. Targeted examinations will be conducted on a subset of the most impacted entities.
ESMA highlighted key risks such as biased or misleading AI outputs, products potentially difficult for investors to understand, and reliance on a limited number of third-party technology providers.
Every three years, ESMA selects up to two priority areas reflecting emerging risks and trends relevant across the EU financial market.
Objectives and Expected Outcomes
This intensive monitoring seeks to help regulators gather insights on the disclosures firms make to investors regarding emerging technologies, and showcase examples of innovations that improve investor outcomes, reduce bias, and ensure reliability of results.
The new priority will run alongside an existing USSP on cyber and operational resilience, which began in 2025, while a separate priority on environmental, social, and governance (ESG) disclosures is set to conclude by the end of this year.
Why it matters
ESMA’s new supervisory priority reflects the increasing adoption of artificial intelligence and tokenization within the EU's financial sector. By fostering coordinated and effective supervisory approaches, it addresses specific risks such as AI bias and investor comprehension challenges associated with novel products. Given the rapid pace of digital innovation and its transformative potential for financial services, this initiative is critical for safeguarding investor interests and ensuring market stability across the European Union.
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