ESMA will focus on regulating AI and transforming it into a token across the European Union in 2027.

The European Securities Regulatory Authority (ESMA) will designate artificial intelligence (AI) and tokenization as the starting point of a new set of priorities for regulating digital innovation, with effect from 2027.

Across the European Union, regulatory agencies will seek to identify where AI use is occurring and document how companies are using or planning to apply AI and technology in products and processes that directly impact investors.

ESMA said on Wednesday that the ranking is aimed at helping regulatory agencies build expertise and develop common approaches as companies begin to use AI and technology products in financial services more widely.

The idea was initially classified as a Union Strategic Supervisory Priority (USSP), which ESMA uses as a tool to coordinate the work of national supervisors on risks that need to be monitored across countries. ESMA's fact-finding document identifies notable risks, including the impact of biased or misleading AI, products that investors may not understand and reliance on limited third party providers

Every three years, ESMA will prioritise two topics related to the EU and reflect new developments and emerging trends.

In addition, the regulatory agency also plans to review information that companies provide investors about new technologies, along with sharing examples of innovations that help improve investor outcomes, reduce fraud and guarantee credibility of results.

This new priority will be implemented alongside the existing USSP on cyber and operational resilience, which was launched in 2025, while ESMA is closing another priority for environmental, social and governance (ESG) disclosure this year.

RELATED NEWS: ESMA warns that the development of increased crypto-linkages may increase risks to traditional currencies