DLT-based Instruments in the Context of Securities Definitions

Abstract

Abstract Distributed ledger technology (DLT) has become a vital technological tool for digital transformation worldwide. This chapter examines the regulation of DLT in the context of European capital markets law and its definition as a security. It examines whether DLT is already regulated as a security in the traditional sense and finds that the current legal situation is sufficient. However, a definition of DLT in the context of Article 4 MiFID II would be helpful. The chapter also analyses the forthcoming EU MiCA regulation and its impact on DLT in the context of securities regulation and its relationship to current securities legislation. It provides a brief comparative overview of various approaches to regulating DLT and shows that a technology-neutral approach is preferred, even if DLT has often inspired the formulation of a universal definition. It argues that the definition of DLT in a European Capital Markets code should be separated from the definition of traditional securities and should be open to new technologies. Overall, the chapter emphasizes the importance of developing a flexible and adaptable definition of DLT that can keep pace with rapidly evolving technologies.