European financial authorities will begin assessing how firms deploy artificial intelligence and tokenization in customer-facing financial products, with the most affected institutions expected to face initial supervisory reviews under a new 2027 program.
The European Securities and Markets Authority (ESMA) said AI, tokenization and other emerging financial technologies will become a formal supervisory priority from 2027.
ESMA said firms are increasingly incorporating AI and tokenized products into everyday financial services as they seek to strengthen their market positions. The regulator acknowledged the potential benefits of technological innovation while warning that new technologies can also introduce additional risks.
Under the planned framework, ESMA and national supervisors throughout the European Union will examine the use of AI and tokenized assets in firms’ core business activities. The review will extend beyond internal technology and back-office systems to applications that directly influence customers.
The initiative, dubbed “Innovation with investor safeguards,” will seek to improve supervisors’ ability to monitor emerging technologies while checking that financial firms maintain sound governance, trustworthy data and outcomes that are consistent with customer interests.
ECB Increases Tokenization Activity
The European Central Bank (ECB) has also recently taken steps to expand its involvement in tokenized financial markets and stablecoins.
The central bank said earlier this week that it intends to place a small share of its reserves into tokenized securities, giving it direct exposure to blockchain-based financial instruments.
The announcement came shortly after the launch of Pontes, an ECB wholesale platform that links distributed ledger technology (DLT) market infrastructure with the central bank’s existing payment infrastructure. Pontes operates separately from the retail digital euro pilot planned for 2027.
The ECB and the central banks of the EU’s 27 member states also urged broader restrictions on crypto platforms that provide yields, rewards or returns on stablecoins. They argued that digital assets pegged to fiat currencies should be treated as money rather than savings products.
Broader Oversight of Tokenized Finance
European regulators will spend the coming year identifying where financial institutions already use AI and tokenization, as well as where they plan to introduce the technologies into customer-facing products and processes.
Authorities will conduct early-stage reviews of selected firms with significant exposure to the technologies and examine where tokenization is already being used across financial markets.
The approach represents an expansion of the EU’s regulatory focus beyond the Markets in Crypto-Assets (MiCA) framework, which took effect on July 1. Regulators are now looking more broadly at how AI and tokenization are being incorporated into the wider securities and financial-services industry.
