EU finance ministers have agreed the main elements of the Council of the EU’s negotiating position on the market integration and supervision package, or MISP, a broader effort aimed at strengthening integration across European capital markets. One of the most notable points is a much larger expansion of the DLT Pilot Regime for tokenized market infrastructures.

The Council supports lifting the current cap from €6 billion to €300 billion per DLT market infrastructure. That goes well beyond the European Commission’s proposal to raise the threshold to €100 billion, and it also leaves room for a possible later increase to €500 billion through a delegated act by the Commission.

Council pushes for a higher threshold

The DLT Pilot Regime is the EU framework designed to support the use of distributed ledger technology in market infrastructure and tokenization. Under the Council’s position agreed on Friday, the ceiling for activity under the regime would rise sharply from the current €6 billion level.

The proposed €300 billion cap would apply per DLT market infrastructure. Finance ministers also backed a mechanism that could allow the European Commission to increase the threshold further, to €500 billion, through a delegated act at a later stage.

ECB raises concerns over market fragmentation

European Central Bank President Christine Lagarde objected to the Council’s higher figure and called on the European Parliament to revisit it during the legislative process.

Her concern, as outlined in the source report, is that DLT-based structures may not be interoperable and could end up reintroducing fragmentation into European markets. The objection points to an underlying policy debate over how far exemptions and expansion should go while the regime is still meant to function as a pilot.

Why interoperability matters in this debate

The concern about fragmentation may relate to the access and linkage rules in the Central Securities Depositories Regulation, or CSDR. DLT Pilot Regime infrastructures are permitted certain exemptions from that framework.

That makes the size of the permitted activity especially important for policymakers. A much larger limit could accelerate tokenized market infrastructure activity, but critics appear concerned that scaling systems without sufficient interoperability could work against the broader goal of integrated capital markets.

Another MISP issue: who supervises crypto firms

The Council’s negotiating position also addresses crypto supervision under MiCA. In this area, member states do not support moving all oversight to the EU level.

Instead, the Council wants only significant crypto-asset service providers, or CASPs, to be supervised by the European Securities and Markets Authority. Other CASPs would remain under the supervision of national authorities. The source article notes that the criteria for determining a significant CASP were set out separately.

Next step in the legislative process

The Council’s agreement sets out its position for negotiations, rather than concluding the matter. The European Parliament still has a role in shaping the final text, and Lagarde’s intervention indicates that the €300 billion threshold is likely to remain contested.

For now, the confirmed change is political rather than final law: the Council wants a substantially larger DLT Pilot Regime than the Commission proposed, while the ECB is urging lawmakers to take a more cautious view of the risks around interoperability and market structure.

Source: www.ledgerinsights.com