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ESMA Recommends Digital Token Identifier for Pilot of Distributed Ledger Technology Regulation

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ESMA has recommended use of the ISO standard Digital Token Identifier (DTI) for the pilot of its Distributed Ledger Technology (DLT) regulatory regimen. DTIs are issued by the DTI Foundation, a non-profit division of Etrading Software, with a view to bringing standardisation to digital asset and crypto markets.

The DLT pilot will apply from 23 March 2023, extending the EU’s MiFIR reporting regime to cover tokenised financial instruments, and bringing pre- and post-trade transparency and market abuse monitoring to DLT-based securities.

The DTI Foundation issued its first official DTI codes back in November 2021 and has since gone on to issue the identifiers for over a thousand of the most commonly traded digital assets, with more codes being added every day.

Jim Northey, chair of ISO TC68 Financial Services, says: “The ISO 24165 DTI standard has been designed to work well with existing ISO standards that are used for regulatory reporting. The DTI simplifies the addition of digital asset trading and reporting into existing systems.”

Sassan Danesh, CEO of Etrading Software, comments: “Our mission is to increase market stability, transparency and efficiency in the digital asset space and we will continue to work with public authorities and industry to provide this service to the benefit of all stakeholders.”

The DTI is designed to help market participants and public authorities unambiguously identify digital assets and DLTs using ISO standards. The identifier enables EU regulators to monitor digital asset trades for anti-money laundering and combating terrorist financing requirements, as well as systemic risks arising from trading of stable-coins and other digital assets. For financial institutions, the DTI provides the ability to monitor market data for tokenised securities using globally standardised reference data.

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