The European Securities and Markets Authority (ESMA) has announced that digital innovation will become a new Union Strategic Supervisory Priority (USSP) starting in 2027, with an initial focus on artificial intelligence (AI) and tokenisation in EU financial markets. The initiative is intended to strengthen supervisory convergence across Member States while supporting technological innovation, investor protection and the orderly functioning of financial markets.

In its announcement, ESMA stated that the new supervisory priority will focus on ensuring that national competent authorities have the necessary expertise and capacity to oversee the use of emerging technologies by supervised entities. Working in cooperation with national regulators, ESMA intends to examine how financial market participants are deploying AI and tokenisation, while maintaining flexibility to address further technological developments, including advanced AI models.

The initiative reflects the increasing relevance of AI and distributed ledger technologies in financial services. As reported in an article analysing the ESMA’s announcement, ESMA’s decision places these developments among the key areas of supervisory attention for 2027. The article concludes that the new priority is not, however, a separate legislative framework or an announcement of additional regulatory obligations. Rather, it forms part of ESMA’s supervisory convergence activities, which aim to promote consistent approaches among national supervisory authorities.

The new digital innovation priority is aimed to operate alongside ESMA’s existing USSP on cyber and operational resilience, which has been in place since 2025. At the same time, ESMA has announced the conclusion of its USSP on ESG disclosures, launched in 2023. According to ESMA, the latter initiative has contributed to improvements in sustainability disclosures and the quality of information available to investors, although ESG-related supervision remains a continuing area of regulatory attention.

The announcement illustrates the evolving supervisory focus within EU financial markets, where technological innovation and its associated risks are becoming increasingly relevant to regulatory oversight. The practical implications of the new priority will depend on how ESMA and national competent authorities implement it in their supervisory activities from 2027 onwards.