European Securities and Markets Authority prioritizes AI and tokenization oversight in 2027

Europe’s top securities watchdog is preparing to bring AI and tokenization under a single supervisory spotlight. The European Securities and Markets Authority plans to launch a new Union Strategic Supervisory Priority dedicated to digital innovation starting in 2027, with artificial intelligence and tokenization as the first targets. The initiative will require national regulators across the EU to map how financial firms use these technologies in client-facing operations, inspect a subset of those firms, and build shared frameworks for oversight. Why now: the numbers behind the urgency Tokenized equities in the EU have grown from roughly €0.3 billion to an estimated €1.9 billion over just 18 months as of the first half of 2026. ESMA’s concern isn’t just about size. Liquidity fragmentation, where tokenized assets trade in thin, disconnected pools rather than deep unified markets, sits at the top of the worry list. Fragmented liquidity can warp price discovery and make it harder to execute trades at fair value, problems that compound as more traditional finance infrastructure connects with tokenized systems. The broader strategic blueprint was laid out in ESMA’s 2027-2029 Programming...