The European Securities and Markets Authority has announced that it will open a new supervisory priority in 2027 dedicated to digital innovation in financial services, with an initial focus on how supervised entities use artificial intelligence and tokenization.
The initiative, named "Innovation with investor safeguards," is designed to sit alongside ESMA's existing Union Strategic Supervisory Priority on cyber and operational resilience, which has been active since 2025. Together, the two priorities will give the authority a standing focus on how technology reshapes risk across EU financial markets, from operational disruption to the products firms build and sell.
The launch coincides with the conclusion of ESMA's supervisory priority on ESG disclosures, which was launched in 2023 and wraps up this year. The rotation reflects how ESMA structures its supervisory agenda around a small number of thematic priorities that run for a defined period before being replaced or supplemented.
What ESMA will look at
According to ESMA, the stated goal of the Union Strategic Supervisory Priority framework is to protect investors, support financial stability and ensure the orderly functioning of EU financial markets. Under the new digital innovation priority, the authority has flagged three specific risks it intends to monitor: biased or misleading outputs generated by AI systems, financial products that are difficult for investors to understand, and excessive reliance by firms on a limited number of third-party technology providers.
ESMA said it will implement the priority in collaboration with National Competent Authorities, the national regulators responsible for day-to-day supervision across member states. The authority also indicated it intends to keep the priority flexible enough to address technological developments that emerge over the coming years, explicitly citing frontier AI as an area it may need to respond to as the field evolves.
Why it matters for the sector
The move signals that Brussels-level supervision of digital assets and AI-driven finance is set to deepen well beyond the current regulatory perimeter established by the MiCA regulation, which governs crypto-assets in the bloc. Tokenization in particular sits at the intersection of traditional securities regulation and the newer crypto-asset framework, and ESMA's decision to treat it as a standing supervisory theme from 2027 suggests the authority expects the practice to become more embedded in mainstream financial services over the next two years.
No further details on specific supervisory actions, timelines for national implementation, or enforcement measures have been disclosed. ESMA's announcement lays out the priority's scope and rationale but stops short of specifying how compliance will be assessed once the initiative formally begins in 2027.
