DIGITAL SINGLE MARKET
Distributed Ledger Technology (DLT) in Finance: Applications and Regulatory Framework in the European Union
(article by M. Katsioti, Associate and E. Kotzairaki, Legal Trainee published on Lexology, September 10 2024)
Introduction
The urge for digital transformation has prompted businesses within the European Union to
adopt various disruptive technologies to remain competitive in the evolving digital single
market. One such technology is Distributed Ledger Technology (hereinafter referred to as
“DLT”). Although not widely recognized by the majority of consumers, DLT has begun to
play a significant role, particularly in the financial transactions sector. This has raised
numerous concerns regarding market stability, tax evasion, and the protection of
consumers and investors.
This article constitutes an attempt to provide an understanding of DLT and its applications
in finance, while also highlighting practical and theoretical concerns as well as the benefits
of DLT use in finance. Additionally, it provides an overview of the regulatory framework of
the European Union, as part of Europe’s Digital Finance Strategy, and Greece.
Definition of DLT
DLT is a decentralized software system characterized by interconnected peer-to-peer
nodes (i.e. connected computers) that operate without a hierarchical structure or
centralized control. This technology relies on a shared public ledger to record transactions,
with all nodes adhering to the same protocols for transaction registration. In a simple way,
“a distributed ledger is essentially a record of information or database that is shared across
the network”.
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Lexology Link: Distributed Ledger Technology (DLT) in Finance: Applications and Regulatory Framework in the European Union – Lexology