ESMA to Focus on AI and Tokenization in Financial Supervision from 2027
- Starting in 2027, the European Securities and Markets Authority (ESMA) will prioritize AI and tokenization as part of its supervisory framework.
- The initiative aims to help supervisors build expertise and develop common approaches to emerging digital innovations.
- ESMA will document how firms use AI and tokenization in products that impact investors, conducting checks on affected firms.
- Risks identified include biased AI outputs and reliance on a limited number of third-party providers.
- This priority will run alongside an existing focus on cyber resilience established in a previous year.
The new supervisory priority reflects ESMA’s strategy to address risks associated with rapidly evolving technologies in financial services, particularly those affecting investor protection.
With this initiative, ESMA aims to enhance oversight of how firms utilize AI and tokenization, ensuring better outcomes for investors as these technologies become more prevalent. (Source)
