TL;DR
ESMA, the EU’s financial markets regulator, will launch a new Union Strategic Supervisory Priority (USSP) on digital innovation from 2027. Working with national regulators, its initial focus will be on how supervised entities use artificial intelligence and tokenisation, running alongside the existing cyber and operational resilience priority.
The European Securities and Markets Authority (ESMA) will launch a new Union Strategic Supervisory Priority (USSP) on digital innovation from 2027, aimed at helping supervisors oversee how financial firms adopt new technologies while protecting investors and maintaining safeguards. ESMA said the initial focus, in collaboration with National Competent Authorities (NCAs), will be on how supervised entities use artificial intelligence and tokenisation.
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According to ESMA’s announcement, the digital innovation USSP aims to ensure that supervisors across the EU have the expertise and capacity to oversee the use of new technologies by the entities they regulate. The regulator stated it will remain flexible in order to address future technological developments as they emerge, rather than limiting the priority to the technologies identified at launch.
The new priority will run alongside the existing USSP on cyber and operational resilience, which has been in place since 2025. ESMA also said it will continue coordination efforts to address emerging challenges, including those arising from advanced models such as frontier AI, according to the announcement.
In parallel, ESMA is concluding the USSP on ESG disclosures this year, following its launch in 2023. The regulator said it has made strong progress in improving ESG disclosures and helping investors better understand sustainability information and receive quality advice, while noting that ESG remains a long-term journey despite the milestone. A factsheet presenting key information on ongoing and future USSPs accompanies the announcement.
Why EU-Wide Tech Supervision Matters
The announcement signals that AI and tokenisation are moving to the centre of EU securities supervision. Firms operating in EU financial markets — including banks, investment firms, trading venues and asset managers — should expect growing supervisory scrutiny of how they deploy machine learning, generative AI and blockchain-based tokenisation in their businesses.
Because USSPs are designed as convergence tools, they coordinate the approach of National Competent Authorities across member states. This matters for firms operating in multiple EU countries, as supervisory expectations around technology use are likely to become more consistent and more demanding once the priority takes effect in 2027.
The pairing with the cyber and operational resilience USSP also indicates ESMA views technology-related risks as a sustained, multi-year supervisory theme rather than a one-off review. For investors, ESMA frames the effort as a way to preserve protection as innovation accelerates.
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How USSPs Direct Supervisory Resources
USSPs are ESMA’s convergence tools for addressing high-risk areas of strategic importance across the EU. According to ESMA, they help direct supervisory resources toward the risks that matter most for investor protection, financial stability and the orderly functioning of EU financial markets.
The mechanism has been used on a rotating basis. The ESG disclosures USSP was launched in 2023 and is being concluded this year, which ESMA described as a significant milestone while cautioning that ESG work is a long-term effort. The cyber and operational resilience USSP has been in place since 2025 and will continue running when the digital innovation priority begins in 2027.
The new priority extends ESMA’s engagement with technological change in EU markets, where the regulator has already been active on topics such as crypto-asset regulation and the supervisory implications of AI adoption by financial entities.
“The digital innovation USSP aims to ensure supervisors have the expertise and capacity to oversee the use of new technologies.”
— ESMA, in its announcement
Details Still to Be Worked Out
The announcement does not specify the detailed supervisory actions, timelines or assessment methods that will apply under the digital innovation USSP once it begins in 2027. ESMA has not yet published how it will measure firms’ AI or tokenisation practices, or what specific outcomes would trigger supervisory follow-up.
The scope beyond the initial focus areas is also open-ended. While ESMA named frontier AI among future challenges, the regulator has not defined which other technologies could be added to the priority’s scope over time.
It is additionally not clear from the announcement how resources will be balanced between the digital innovation priority and the ongoing cyber and operational resilience USSP, nor what formal coordination mechanisms between ESMA and National Competent Authorities will look like in practice.
Road to the 2027 Launch
ESMA said it will continue coordination with National Competent Authorities ahead of the 2027 launch, building supervisors’ capacity to assess firms’ use of AI and tokenisation. A factsheet on ongoing and future USSPs accompanies the announcement and provides the current planning baseline.
Firms operating in EU securities markets should expect further detail on supervisory expectations as 2027 approaches, including how the priority interacts with existing EU frameworks on operational resilience and technology governance. ESMA has indicated the scope may expand as future technological developments, including frontier AI models, emerge.
Key Questions
What is the new ESMA supervisory priority on digital innovation?
It is a new Union Strategic Supervisory Priority (USSP) launching in 2027 that focuses on how supervised financial entities use new technologies, with an initial emphasis on artificial intelligence and tokenisation, according to ESMA.
When does the digital innovation USSP take effect?
ESMA said the new priority will start in 2027. It will run alongside the existing USSP on cyber and operational resilience, in place since 2025.
Which firms will be affected?
The priority applies to entities supervised under EU securities markets rules, working through National Competent Authorities. ESMA has not yet published a detailed list of expected supervisory actions or assessment criteria.
Why did ESMA choose AI and tokenisation as the initial focus?
According to ESMA, the priority aims to ensure supervisors have the expertise and capacity to oversee new technologies while protecting investors, and AI and tokenisation are the most prominent current examples of adoption by supervised entities.
What happens to the ESG disclosures priority?
ESMA is concluding the ESG disclosures USSP this year, launched in 2023. The regulator reported strong progress in improving disclosures and investor understanding, while stating that ESG remains a long-term effort.
Source: primary
