EU Financial Regulator Sets AI and Tokenization as Key 2027 Priorities

European regulators plan to assess how financial institutions are using artificial intelligence and tokenization in products and services that directly interact with customers, with initial supervisory reviews expected to begin at some of the firms most exposed to these technologies.

The European Securities and Markets Authority (ESMA) said AI, tokenization and other emerging technologies used in financial markets will become a new supervisory priority starting in 2027.

“Firms are increasingly using AI and tokenized products in day-to-day financial services to gain market share,” ESMA said in a report released Wednesday. The regulator said technological innovation can create significant benefits while also introducing new risks.

Under the new supervisory framework, ESMA and national regulators across the European Union will examine how regulated financial firms deploy AI and tokenized products within their core business activities, rather than limiting oversight to back-office applications.

The initiative, known as “Innovation with investor safeguards,” is intended to strengthen regulators’ ability to monitor emerging technologies while ensuring financial firms maintain effective governance, dependable data and outcomes that remain aligned with client interests.

ECB Expands Focus on Tokenized Finance

The European Central Bank (ECB) has also taken several recent steps involving tokenization and stablecoins.

Earlier this week, the ECB said it intends to allocate a small portion of its reserves to tokenized securities, giving the central bank direct exposure to blockchain-based financial markets.

The move followed the launch of Pontes, an ECB wholesale platform designed to connect distributed ledger technology (DLT) market infrastructure with the central bank’s existing payment infrastructure. Pontes is separate from the retail digital euro pilot scheduled for 2027.

The ECB and the central banks of the EU’s 27 member states also called for broader restrictions on crypto platforms offering yields, rewards or returns on stablecoins. The central banks argued that fiat-pegged digital assets should function as money rather than products resembling savings accounts.

Regulators Expand Oversight Beyond MiCA

During the coming year, EU authorities will map where financial institutions already use, or intend to use, AI and tokenization in customer-facing products and processes.

Regulators will also conduct preliminary reviews of a selection of firms most affected by the technologies and track where tokenization is being implemented in real-world financial activity.

The shift expands the EU’s regulatory focus beyond the Markets in Crypto-Assets (MiCA) framework, which took effect on July 1. Rather than concentrating solely on crypto-asset rules, regulators are increasingly examining how tokenization and AI are being incorporated into the wider securities and financial-services industry.

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