ESMA will launch targeted supervision of AI and tokenization in 2027.

According to Cointelegraph, the European Securities and Markets Authority (ESMA) announced that it will formally launch the EU Strategic Supervisory Priorities (USSP) focused on artificial intelligence (AI) and tokenization in 2027. National regulators will comprehensively review the current landscape of tokenization, document how firms utilize AI and tokenization in investor-facing products and processes, and conduct preliminary targeted examinations of the most significantly impacted entities. ESMA noted that the priority aims to help supervisors build expertise and establish a harmonized supervisory approach, focusing on risks such as AI biases or misleading outputs, products that are overly complex for investors to comprehend, and excessive reliance on a narrow set of third-party service providers. This priority will proceed in parallel with the 2025 cyber and operational resilience USSP.