The Danish Financial Supervisory Authority (Danish FSA) said it has started operating on the distributed ledger technology (DLT) framework issued by the European Union (EU). The country’s top financial regulator was the first in the region to start trials in a sandbox.
A number of organisations are participating in the sandbox, led by Deon Digital, with a primary focus on launching green bonds under the FSA’s sandbox FT Lab. Tobias Thygesen, head of FT Labs, pointed out that the benefits of distributed ledgers are that they can increase transparency and promote trust among users.
“Therefore, this technology has the potential to make capital markets more efficient, but may not be without new risks,” Tigson said.
“This is one of the reasons for the introduction of the new European DLT pilot regulation; to create a safe space where new technologies can be tested,” he added.
The EU has been working to create a unified approach to using a decentralized ledger, culminating in the launch of a DLT pilot regime for tokenized securities in June. The law is expected to come into force on March 23, 2023, for a period of three years, with the regulator having the power to extend the supervision period for a further three years.
Under the law, securities offerings on DLT platforms are limited to $6.4 billion, while stock offerings are limited to companies with a market capitalization of less than $500 million. The EU considers tokenized securities as “crypto assets that qualify as financial instruments” and “may be bonds, stocks or money market securities.”
The European Union has proposed regulations on the Market for Crypto Assets (MiCA) in order to improve the financial uniformity of the industry. Additionally, the European Central Bank (ECB) is working together to create a digital euro. The banking regulator plans to work with five companies to test the “user interface” of a central bank digital currency (CBDC).
go green or go home
The EU’s DLT sandbox project is already playing a role in agricultural and environmental sustainability, and agtech company Agreena is also leveraging it. The company’s CEO Simon Haldrup noted that financial services have historically been at the forefront of promoting sustainable development, and DLT will only help simplify the process.
“Here, we have an immutable ledger that itself gives you a tracker and proof point of green impact. We have a delineated digital asset that we plug directly into the financing structure of a financial institution,” he said. Say.
The EU’s proposed CBDC also has energy efficiency as part of its core considerations, with user privacy taking center stage as regulators decide on the viability of a digital euro.
Watch: CoinGeek New York panel, How to Green Bitcoin: Energy Consumption and Environmental Sustainability
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