Blockchain technology, like a Swiss army knife, can also give different solutions according to the problem. Over the past decade, the application of blockchain technology has gradually grown from wealth and payments to decentralized exchanges and irreplaceable dynamic passwords. At this stage, it seems that the next most important test case of block chain technology is undoubtedly the individual stock of coding change.

Now, investors can buy other stocks such as Tesla from cryptocurrency financial companies such as bit Dog Little Panda. However, such stocks are not stored and traded using blockchain technology. Bittrex, the cryptocurrency exchange around the world, did briefly allow investors to trade representative stocks such as Apple and Pfizer, but they stopped trading representative stocks not long after they went public. The reason why the cryptocurrency exchange and the traditional exchange did not complete the representative individual stock trading is that it is still a black zone of laws and regulations.

In order to give a legal response to coded individual stocks, the European Commission will unveil an innovative system in March 2023, which is likely to usher in the "killer use" of blockchain technology. The DLT pilot system, overseen by the European Regional Bureau of Securities Market Supervision (ESMA), will test the full potential of tagged secure transactions in blockchain technology. The term "securities" can refer to individual stocks, bonds, private equity and most other types of investment and financial management. ESMA calls the securities of these distributed books "DLT financial instruments", which means that they are financial instruments that use distributed ledger technology to sell, record, migrate and store.

Companies from traditional finance and digital finance will be able to experiment with DLT financial products in a controlled environment. There are two most powerful aspects of this system: first, the identification and trading of financial instruments can use distributed system ledger technology, which is also licensed by publicly published and unauthorized blockchain technologies. Second, the DLT financial instrument will not only be able to meet standards or trade with professional investors; in turn, regulators will try to involve retail investors.

One of the companies applying for a license to operate under the DLT-Pilot control system is 21Finance. CEOMax Heinzle, who calls the symbolization of securities "Amazon platform all the time", said in an interview that the rule would contribute to the diversity of the financial sector.

"data encrypted securities enable more than 8 billion people to receive financial information services based on direct settlement," Heinzle said. Data encryption securities are expected to account for more than 30 per cent of the digital money market in 2026-not including the impact of the DLT pilot system. "

As part of an experiment involving blockchain technology, participants in the DLT pilot system will be exempted from some of the provisions of financial information services legislation. Part of this law includes the Market for the Sale of Financial Instruments order (MiFID) and the Central Securities Trusteeship regulations (CSDR). Under the DLT trading and settlement platform (TSS), trading and clearing need to be given by a single trading enemy, which makes it particularly interesting because lower intermediaries tend to mean less and less spending on end users.

However, I have to be very careful here, because this is not the word commonly used in trading. In turn, under the administrative authority of ESMA, DLT TSS will need to meet the DLT system, which means that only non-optional multilateral cooperation can be allocated. As a result, participants in the DLT pilot system will not be able to use fully transparent order information such as cryptocurrency exchanges such as Binance to conduct transactions. Conversely, the trading address is not optional.

Regulated financial institutions, their young financial wealth management companies and login password startups controlled as financing intermediaries have long been allowed. Therefore, after the first three years of the project, ESMA will write a report as a prerequisite for the European Commission. Instead, the report will be communicated to the European Parliament and the European Council. They then decide directly what countermeasures to take, such as improving financial instruments and increasing or reducing restrictions.

To participate in the DLT pilot program, novices in the financial industry without a MiFID or CSDR license will need to obtain special permission from the relevant financial regulators. All this means that cryptocurrency exchanges and service providers will be able to browse sandboxie's games without having to follow the broader financial responsibilities of EU countries that traditional organisations are required to adhere to.

Although ESMA has not identified participants, banks and trading venues such as Bank of New York Mellon and Binance have shown interest in participating.

The DLT pilot system will come into effect in March, but it has been under consideration for many years, gradually from the digital finance package released by the European Commission (European Commission) in 2020. The aim is to implement and encourage breakthroughs in digital finance and the development potential of market competition, while limiting the related risks. The plan also includes encrypted asset market management, digital operation elasticity laws, and proposals to define or modify financial information service rules in some EU countries-for example, rules relating to retail payments.

The new project of DLT pilot system will eventually become the premise for EU countries to apply the technology of distributed ledger in the future financial system.

Demelza Hayes is the director of research at Cointelegraph. Over the last eight years, she has authored over 20 analytical reports on digital assets and managed two regulated cryptocurrency funds. She was a Forbes 30 Under 30 recipient in Europe in 2019 and a U.S. State Department Fulbright Scholar from 2012 to 2013. She completed her Ph.D. in business economics at the University of Liechtenstein in 2021. Inspired by her work in wealth management, her dissertation explored the role of cryptocurrency within a diversified portfolio. In her free time, she enjoys hiking, tennis and sailing.