Focus on artificial intelligence and tokenisation
The first phase of the ESMA digital innovation priority zeroes in on two areas: artificial intelligence and tokenised products. According to reporting by CoinDesk, ESMA noted that firms across the EU are increasingly deploying AI tools and tokenised offerings to gain market share, and that this kind of innovation “brings benefits but also risks.” The watchdog and national regulators intend to examine how firms use these technologies in core client-facing activities, not just in back-office processes.
The initiative aims to ensure firms have proper governance, data reliability and customer outcomes that hold up to scrutiny.
Objectives to build supervisory expertise and flexibility
Rather than locking in rigid rules from day one, ESMA is designing this union strategic supervisory priority to stay adaptable. The regulator has said it will remain flexible enough to address future technological developments as they emerge, which matters because AI and tokenisation are moving faster than most rulebooks can keep pace with. That flexibility is also meant to give National Competent Authorities room to build up their own technical know-how before enforcement gets more prescriptive.
Integration with existing supervisory priorities and recent milestones
The new digital focus does not replace what ESMA already has running. It sits alongside an active resilience agenda and follows the recent wrap-up of a multi-year ESG effort, showing a regulator juggling several strategic tracks at once rather than starting from scratch.
Operating alongside the USSP on cyber and operational resilience since 2025
ESMA confirmed that the digital innovation priority will run in parallel with the USSP on cyber and operational resilience, which has been in place since 2025. The two efforts are meant to reinforce each other: one watches how firms protect their systems, the other watches how firms use the technology running on top of those systems. ESMA has said it will keep coordinating on challenges tied to advanced models, including what it calls frontier AI.
Completion of the 2023 USSP on ESG disclosures
This year also closes out a separate chapter. ESMA launched a USSP on ESG disclosures in 2023, and it is wrapping that priority up in 2026. The regulator has described this as a significant milestone in improving sustainability reporting and advice quality for investors, though it frames ESG oversight as an ongoing, longer-term effort rather than a finished project.
Implementation approach and purpose of Union Strategic Supervisory Priorities
USSPs exist to point limited supervisory resources at the risks that matter most, and this new one is no exception. ESMA describes these priorities as convergence tools aimed at high-risk areas of strategic importance across the EU, designed to protect investors, safeguard financial stability, and keep EU financial markets functioning in an orderly way.
Collaboration with National Competent Authorities
Delivery of the digital innovation agenda depends heavily on teamwork. ESMA has said its initial focus on artificial intelligence and tokenisation will be carried out in collaboration with National Competent Authorities, the regulators embedded in each EU member state. In practice, that means EU-wide mapping exercises paired with country-level checks, so that oversight reflects both the bigger regulatory picture and the specifics of local markets.
Targeting high-risk strategic areas protecting investors and financial stability
Why put AI and tokenisation at the top of the list now? Because both technologies are already influencing how financial products reach ordinary customers, not just how firms manage internal processes. CoinDesk reported that EU authorities plan to map where firms already use, or intend to use, AI and tokenisation in customer-facing products next year, then run initial checks on a subset of the most exposed firms to identify where tokenisation is showing up in practice.
This effort also lines up with a broader regulatory pivot. The EU spent recent years building crypto-specific rules under the Markets in Crypto-Assets framework, which took effect on 1 July 2026. The new ESMA digital innovation priority signals a shift in emphasis, from writing rules for crypto assets toward examining how tokenised finance and AI actually get used across the wider securities industry, well beyond crypto-native firms alone.
ESMA is not working on this in isolation. Alongside the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), it has jointly called for stronger governance and more consistent supervision of ICT risks tied to frontier AI models across the EU financial sector, suggesting the three authorities see AI risk as a cross-sector problem rather than one confined to securities markets alone.
For firms operating in EU markets, this points toward closer scrutiny of the systems behind automated trading, robo-advice, tokenised fund shares and similar products, well before any final rulebook lands. For investors, it means a regulator trying to get ahead of a wave of technology adoption rather than catching up to it after problems emerge. ESMA has published a factsheet laying out details of its ongoing and upcoming USSPs, giving firms a reference point as they prepare for 2027.
FAQ
What is ESMA’s new supervisory priority starting in 2027?
ESMA will launch a digital innovation Union Strategic Supervisory Priority focused on overseeing the use of new technologies such as artificial intelligence and tokenisation.
How will ESMA implement the new digital innovation supervisory priority?
ESMA will collaborate with National Competent Authorities to supervise the use of AI and tokenisation by regulated entities and build supervisory expertise.
Will the digital innovation priority replace existing supervisory priorities?
No, it will operate alongside the existing USSP on cyber and operational resilience, maintaining coordinated efforts.
What are the goals of the Union Strategic Supervisory Priorities (USSPs)?
USSPs direct supervisory resources toward high-risk strategic areas to protect investors, maintain financial stability, and support the orderly functioning of EU financial markets.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
