On 4 December 2025, the EU Commission published proposals impacting the supervision of cryptoasset service providers (CASPs) and substantially amending the DLT Pilot regime.

This newsflash is part of a series of newsflashes dedicated to the changes proposed in the recent EU Commission’s Market Integration Package. For an overview of all the proposed changes, please see our main newsflash on the EU Market Integration Package

Markets in Crypto-Assets Regulation (MiCA) – proposed transfer to ESMA supervision

Transfer of supervisory powers

The proposed amendments to MiCA essentially transfer the supervision of CASPs from national competent authorities to ESMA, which would become responsible for the authorisation, ongoing supervision and enforcement of MiCA in relation to CASPs. ESMA would also become responsible for the supervision of the MiCA rules to deter, investigate and sanction market abuse for cryptoassets admitted to trading on cryptoasset trading platforms.

This represents a fundamental change to the current supervisory framework and will likely lead to further discussions.

Scope of ESMA supervision

Regulated entities, such as investment firms, that already provide cryptoasset services without CASP authorisation would continue to be supervised by their existing competent authorities. However, if the provision of cryptoasset services becomes their main activity (more than 50% of total turnover in two consecutive years), supervision for all their activities would be transferred to ESMA, except for banks.

The amendment includes transitional provisions for the transfer of supervisory duties from national competent authorities to ESMA.

DLT Pilot regime – proposed expansion

The DLT Pilot Regulation, applicable since 2023, established an EU-wide flexible regime for experimenting with DLT for trading and settlement of financial instruments, but its uptake remains moderate with a limited number of approved applicants. The new package proposes to significantly expand the regime in a bid to make it more attractive.

Expanded scope: the scope of eligible assets, currently limited to shares, bonds and units in collective investment undertakings (UCITS), would be expanded to all financial instruments. The scope of eligible participants would be reviewed to allow CASPs operating trading platforms to participate in the pilot regime.

Increased scale: the scale of activities would be significantly increased, with the removal of all existing asset-specific caps and a significant increase in the total value of financial instruments a DLT market infrastructure can intermediate under the pilot regime, from EUR 6 billion to EUR 100 billion.

Enhanced flexibility: smaller firms servicing up to EUR 10 billion in aggregated market value of DLT financial instruments would be permitted to operate a DLT market infrastructure under a simplified regime.

Individual CSD services: the pilot regime would allow a wide range of financial entities (investment firms, regulated markets, credit institutions, CSDs and CASPs) to individually provide specific CSD core services – namely DLT notary services or DLT central maintenance services – upon obtaining specific permission. Additionally, a novel settlement model would be introduced through “settlement schemes”.

Targeted exemptions: new provisions would allow operators of DLT market infrastructures to obtain exemptions from specific requirements under MiFID II, MiFIR and the CSDR where these provisions are found to be incompatible or highly disproportionate with the use of DLT.

Long-term certainty: the current time limits for the duration of the permissions granted under the pilot regime would be removed.

Integration with CSD framework

The CSDR amendments aim to integrate experimental advancements into the mainstream regulatory framework as regards settlement, with the DLT Pilot regime remaining a pilot framework with certain activity-related thresholds whilst the amendments to the CSDR would allow for unlimited scale in DLT-based CSD activities. Careful attention should be paid to the interaction between these two parallel regimes.

Next steps: legislative process and implementation timeline

It is critical to note that these are EU Commission proposals only. The proposals must now undergo the EU legislative process, as they require approval by both the EU Parliament and the Council of the EU. The proposals are expected to be subject to further negotiations and amendments.

The legislative proposals include a phased implementation timeline: most amendments would apply 12 months after entry into force to allow ESMA time to prepare for its new supervisory role and governance changes.

For further information on the other aspects of the Market Integration Package, such as trading and post-trading infrastructures, investment funds supervision and investment funds distribution, please refer to our related newsflashes.

Related documents

• EU Commission unveils “Market Integration Package” intended to create more integrated capital markets and reinforce the single rulebook principle
• Simplifying operations for UCITS management companies and AIFMs
• Streamlining cross-border distribution of UCITS and AIFs inthe EU
• Market Integration Package – EU Commission proposes radical overhaul of trading and post-trading infrastructures