ESMA’s digital innovation priority puts AI and tokenisation under watch in 2027

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Europe’s top securities watchdog is getting ready to put artificial intelligence and tokenisation under a formal supervisory microscope. The European Securities and Markets Authority (ESMA) has confirmed that its next major ESMA digital innovation priority will kick off in 2027, marking a shift from writing crypto rulebooks to actually checking how financial firms use these technologies day to day.

Key takeaways

ESMA will launch a new Union Strategic Supervisory Priority (USSP) on digital innovation starting in 2027.
The initial focus will be on how supervised firms use artificial intelligence and tokenisation.
The new priority will run alongside the existing USSP on cyber and operational resilience, in place since 2025.
ESMA is also concluding its USSP on ESG disclosures this year, following its 2023 launch.
National regulators will map AI and tokenisation use in client-facing products before running checks on a subset of the most affected firms.

ESMA Announces New Digital Innovation Supervisory Priority for 2027

ESMA says the goal is simple to state but harder to execute: give supervisors across the European Union the expertise and capacity they need to actually oversee how new technologies are being deployed in financial services. The regulator, which oversees markets and supervisors throughout the EU, framed the move as an effort to let innovation flourish without weakening protections for investors.

Focus on Artificial Intelligence and Tokenisation

For the first phase, ESMA is narrowing its lens to two areas: artificial intelligence and tokenisation. According to a factsheet cited by CoinDesk, ESMA explained that “firms are increasingly using AI and tokenized products in day-to-day financial services to gain market share,” adding that “technological innovation brings benefits but also risks.” That reasoning underpins the entire priority — supervisors want visibility into how these tools show up in the products investors actually touch, not just in back-office processes.

National regulators are expected to map where firms already use, or plan to use, AI and tokenisation in products and processes that directly affect customers. From there, supervisors will run initial checks on a subset of the most exposed firms and track where tokenisation is genuinely gaining traction, rather than staying theoretical.

Cooperation with National Competent Authorities

None of this happens in isolation. ESMA said it will work in collaboration with National Competent Authorities to carry out the digital innovation priority, a structure it already uses for its other supervisory convergence tools. That coordination matters because AI and tokenisation adoption will not look uniform across 27 member states — some national markets are moving faster than others, and a shared framework is meant to keep oversight consistent rather than fragmented.

Continuity and Coordination with Existing Supervisory Priorities

The 2027 rollout does not replace what ESMA is already doing — it adds another layer on top of an existing supervisory framework built around rotating strategic priorities.

Running Alongside Cyber and Operational Resilience Priority

The digital innovation priority will run in parallel with the USSP on cyber and operational resilience, which has already been in place since 2025. That means supervisors will be juggling two active strategic priorities at once: one focused on keeping systems resilient against cyber threats and operational failures, and the new one focused on how firms actually use emerging technology in their products. ESMA has indicated it intends to keep coordinating both efforts rather than treating them as separate silos.

Concluding ESG Disclosures USSP and Its Legacy

At the same time, ESMA is wrapping up a different chapter. The USSP on ESG disclosures, launched back in 2023, is concluding this year. ESMA credits that priority with meaningful progress in improving the quality of sustainability disclosures and helping investors better understand the sustainability information behind the products they buy, along with the advice they receive. The regulator has been careful to frame this as a milestone rather than a finish line, noting that ESG remains a long-term area of work even after the formal priority ends.

Strategic Importance and Forward Outlook of ESMA’s Digital Innovation USSP

Beyond the mechanics, this priority tells a broader story about where EU financial regulation is heading next. The EU is now pivoting toward scrutinizing how tokenised finance and AI actually get used across the wider securities industry — not just within crypto-native firms.

Flexibility for Emerging Technologies like Frontier AI

ESMA has been explicit that artificial intelligence and tokenisation are the starting point, not the finish line. The regulator says it intends to stay flexible enough to respond to future technological shifts as they emerge, including challenges tied to more advanced models often referred to as frontier AI. That framing suggests the digital innovation priority is designed as an evolving mandate rather than a fixed checklist — one that can expand its scope as the technology itself keeps changing.

Objectives in Investor Protection and Market Stability

At its core, this initiative is a convergence tool. According to ESMA, Union Strategic Supervisory Priorities serve as tools that channel supervisory resources toward the most significant risks affecting investor protection, financial stability, and the smooth operation of EU markets. In practice, that means the digital innovation priority is less about slowing down AI or tokenisation adoption and more about making sure the safeguards around them keep pace with how quickly firms are rolling the technology out.

The European Central Bank has separately been active in adjacent areas of tokenised finance, including plans to invest part of its reserves in tokenised securities and moves around stablecoin yield restrictions — developments that sit alongside, though separately from, ESMA’s supervisory work. Taken together, the direction of travel across EU financial oversight looks increasingly focused on how emerging technologies interact with everyday financial products, rather than treating them as a niche corner of the market.

FAQ

What is the main aim of ESMA’s new digital innovation supervisory priority?

Its primary goal is making sure that supervisors possess the necessary skills and resources to monitor emerging technologies, including AI and tokenisation.