Digitalisation is rapidly transforming capital markets, reshaping how capital is raised, traded, and allocated - a process which will continue and accelerate in the coming years.
In recent years, an extensive effort from EU policymakers has been under way to rethink the regulatory framework for digital technologies. Important legislative milestones have been achieved over the past legislative cycle, crafting a comprehensive framework to govern emerging technologies, data flows, and financial innovation and build resilience. In some cases, the result has been a complex and fragmented landscape that increasingly challenges businesses and hinders the EU’s competitiveness.
Enabling digital innovation in European capital markets – and the broader financial sector – requires a simplification of digital finance related rules, to reduce unnecessary or duplicative administrative burdens and foster a more agile and innovation-friendly regulatory environment.
Simplification must become a central pillar of EU digital finance policy. This includes:
- Eliminate duplication, especially where horizontal regulations overlap with sector-specific rules.
- Ensure effectiveness by aligning regulatory requirements with their intended outcomes.
- Maintain a proportionate cost-benefit balance, which acknowledges compliance burdens.
- Provide clarity to reduce uncertainty and support innovation.
- Promote international standards to facilitate global competitiveness.
The planned digital simplification package, announced by the European Commission for Q4 2025
provides a crucial opportunity to achieve this objective.
This paper sets out concrete proposals to reduce administrative burdens and foster a more agile and
innovation-friendly regulatory environment.
