The European Securities and Markets Authority (ESMA) will have national regulators across the EU examine how financial firms use artificial intelligence and tokenization, starting in 2027, the watchdog announced on Wednesday.

The program, named Innovation With Investor Safeguards, is a Union strategic supervisory priority (USSP), a tool ESMA uses to set shared targets for the bloc’s national competent authorities. ESMA picks up to two of these topics every three years, and national supervisors then work on them annually within parameters agreed with ESMA, according to a factsheet released alongside the announcement.

“Firms are increasingly using AI and tokenised products in day-to-day financial services to gain market share,” ESMA said in the factsheet.

What Supervisors Will Do in 2027

Next year, national authorities will catalog where firms deploy AI and tokenization, or intend to, in products and processes that shape client outcomes, rather than in back-office work alone. They will also carry out initial checks on a subset of the firms most affected, pinpoint where tokenization is showing up in practice and assess what staff and tools they need to supervise it.

The factsheet lists the risks ESMA wants supervisors to watch: AI outputs that may be “biased, unclear or misleading,” new products investors may struggle to understand, gaps in supervisors’ own skills, and growing dependence on a small number of third-party technology providers. It also cites potential benefits, including cheaper and faster processes, new products and more connected EU markets.

“We will remain flexible to address future technological developments as they emerge,” ESMA said in its announcement.

Crypto Firms Enter Cyber Resilience Checks

The new priority runs alongside ESMA’s cyber and operational resilience priority, launched in 2025, which focuses on compliance with the EU’s Digital Operational Resilience Act (DORA). In 2027, ESMA said, that work will widen to include smaller supervised firms and crypto-asset service providers, the category of crypto businesses licensed under MiCA.

MiCA’s transition period for crypto firms ended in July, and the European Commission is now weighing a revision of the rulebook that could cover tokenization. Earlier this week, the European Central Bank and national central banks asked the Commission to extend MiCA’s stablecoin interest ban to lending and staking.

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