The European Commission has confirmed that its proposed reform of the Central Securities Depositories Regulation (CSDR) explicitly allows central securities depositories (CSDs) to settle the cash leg of securities transactions using certain electronic money tokens (EMTs) regulated under the Markets in Crypto-Assets Regulation (MiCAR). In a written answer to German MEP Sibylle Berg (NI), Commissioner Albuquerque explained that the proposal, part of the Market Integration and Supervision Package, aims to foster innovation by enabling DLT-based settlement while maintaining safeguards. The answer clarifies that EMTs backed by central bank deposits held in TARGET accounts do not qualify as 'central bank money' under Article 40 CSDR, but the proposal introduces a separate definition of central bank money and empowers the European Securities and Markets Authority (ESMA) to draft technical standards on DLT settlement operationalisation.
The question, submitted on 25 February 2026, raised concerns about whether EMT models with reserves fully held as central bank deposits could be considered settlement in central bank money, and whether the transition to T+1 (settlement one day after trading) would hinder voluntary T+0 DLT models. Commissioner Albuquerque's answer provides concrete policy direction: the CSDR amendment proposal includes legal empowerments for ESMA to draft technical standards on communication protocols and risk mitigation for DLT use, and confirms that the DLT Pilot Regulation does not preclude same-day settlement. The shorter settlement cycle to T+1 will apply from 11 October 2027 under Regulation (EU) 2025/2075.
Policy orientation and ambition The answer signals a moderate but clear push to integrate DLT and EMTs into mainstream securities settlement, balancing innovation with regulatory clarity. The Commission avoids a blanket endorsement of EMTs as central bank money, instead creating a distinct category. This approach favours flexibility for market participants while maintaining the primacy of central bank money for settlement. The empowerment of ESMA indicates a preference for technical rulemaking rather than political negotiation on detailed operational aspects.
Expected institutional follow-up The CSDR amendment proposal is currently under negotiation in the European Parliament and Council. ESMA is expected to develop technical standards once the legislative framework is adopted. The timeline for Level 2 measures will depend on the co-legislators' progress, but the Commission's answer suggests that clarifications will follow the adoption of the reform, not precede it. The answer does not commit to a specific date for further measures beyond noting the ongoing legislative process.
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