Market Integration package: a new hope for DLT Market Infrastructures?

By Pierre E Berger, Nikolas Kalokyris and Joris Latui - DLA Piper

In recent years, financial institutions have increasingly explored the use of distributed ledger technology (DLT) in capital markets, particularly for the tokenization of financial assets¹. A growing number of international financial groups have launched concrete primary and secondary market initiatives, such as the issuance of tokenized bonds, the launch of tokenized money market funds or other initiatives aimed at enhancing cross-border payments and supporting the settlement and collateralisation of tokenized assets.

These developments highlight the need for robust and legally sound market infrastructures capable of supporting DLT-based trading and post-trading activities. In this note, we assess the European regulatory framework applicable to DLT market infrastructures and, in particular, the evolution of the DLT Pilot Regime proposed under the Market Integration package.

1. The DLT Pilot Regime

The European Commission has long viewed DLT as potentially transformative for financial

markets but observed that its uptake by regulated market infrastructures has remained limited due to regulatory barriers and legal uncertainty. To address this, the EU introduced, in 2022, the DLT Pilot Regime², a European regulatory sandbox to allow for experimentation with DLT in the trading and post-trading of tokenized securities, where existing provisions may, in practice, restrict or even prevent the use of DLT in financial markets.

The DLT Pilot Regime introduces a new regulatory status for DLT market infrastructures, covering three categories of entities:

• DLT Multilateral Trading Facilities (DLT MTFs)

• DLT Settlement Systems

• DLT Trading and Settlement Systems

These infrastructures may admit to trading and record DLT financial instruments, i.e. shares, bonds and funds' units issued, registered, transferred and stored using DLT, but subject to strict size limits.

A key feature of the regime is the possibility to request temporary regulatory exemptions from certain provisions of European financial regulations (MiFID II³ and CSDR⁴), such as intermediation or book‑entry requirements.

Applicable since March 2023 for a period of six years, the regime was designed both to foster innovation and to enable regulators to identify obstacles to the broader deployment of DLT in EU financial markets.

2. Limited uptake of the DLT Pilot Regime

   
   

By early 2026, only six DLT market infrastructures had been authorised under the regime, highlighting its low uptake and suggesting a structural lack of market interest.

This limited adoption is largely attributed to high compliance burdens, strict product and activity caps and limitations on eligible assets, and uncertainty stemming from the regime’s experimental and time‑limited nature. As a result, a significant proportion of the investment in DLT-based market infrastructure has come from incumbent firms outside of the DLT Pilot Regime.

3. New opportunities under the Market Integration Package

   
   

On 4 December 2025, the European Commission adopted the Market Integration Package, whose objective is to address the persistent fragmentation of EU capital markets⁵. The package also introduces targeted amendments intended to enhance its flexibility, proportionality and overall attractiveness.

3.1 Scope of eligible instruments and scale of activities

The Market Integration Package would significantly recalibrate the DLT Pilot Regime by expanding its scope, scale and accessibility. It would broaden the range of eligible financial instruments and activities, allow DLT trading venues to operate both MTFs and OTFs, and substantially increase the maximum aggregate market value of DLT financial instruments, thereby addressing the regime’s previous lack of scalability. In particular, all asset-specific caps should be withdrawn, whereas the aggregate cap should be raised to EUR 100 billion. The DLT pilot program would also lose its temporary nature and become permanent.

3.2 Simplified regime for smaller DLT market infrastructures

The package proposes to introduce a simplified and proportionate regulatory framework for smaller DLT market infrastructures, particularly settlement providers below a EUR 10 billion threshold, reducing entry barriers while preserving core safeguard.

3.3 Expanding scope of eligible entities

The reform also widens the range of eligible operators to include authorised crypto‑asset service providers (CASPs) that operate trading platforms and strengthens regulatory flexibility through additional, targeted exemptions from EU trading and post‑trading rules.

3.4 CSD services, settlement schemes and interoperability between DLT market infrastructures

In addition, the package would allow core CSD services (notary and central maintenance functions) to be provided on a service‑specific basis by a broader range of regulated entities. This would enable the issuance and recording of DLT financial instruments outside a traditional CSD, while preserving settlement through regulated market infrastructures. The reform also introduces a new settlement model based on DLT account keepers with access to central bank money, operating within authorised settlement schemes overseen by ESMA.

To promote the use of e-money tokens (EMT) denominated in Union currencies, settlement of payments in EMT for assets denominated in Union currencies would have to be carried out in EMT referencing EU currencies. DLT market infrastructures would also be encouraged to offer settlement in euro-denominated EMT, even if the financial instrument that is settled is denominated in a non-EU currency.

As the Market Integration Package is still at the proposal stage and has not yet been formally adopted, its practical impact remains prospective. While the proposed changes have been welcomed in principle, market participants have so far reacted cautiously, pending confirmation of the final legislative framework and its practical implementation. The proposed amendments have also not changed the primary market focus of the DLT Pilot Regime, even though recent years have shown that a lot of DLT use cases are developing in the secondary markets – the interest in collateralising money market fund interest being a case in point. The currency limitations for stablecoin payments also appear difficult to reconcile with the simplification objectives of the Market Integration Package; the Commission sees it as a potential spur for the development of euro stablecoin, but there is a risk that it will be perceived as a limitation that makes participation in the DLT Pilot Regime less attractive.

¹IOSCO, Tokenization of Financial Assets, Final Report, FR/17/25, November 2025.

²Regulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology.

³Directive 2014/65/EU of 15 May 2014 on markets in financial instruments.

⁴Regulation 909/2014 of 23 July 2014 on central securities depositories.

⁵Proposal for a Regulation of the European Parliament and of the Council of 4 December 2025 amending Regulations (EU) No 1095/2010, No 648/2012, No 600/2014, No 909/2014, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, No 1060/2009, 2016/1011, 2017/2402, 2023/2631 and 2024/3005 as regards the further development of capital market integration and supervision within the Union.