The European Securities and Markets Authority (ESMA) held a financial innovation event in Paris on 16th December, during which the topic of blockchain and distributed ledger technology was discussed.

According to details of the event published by ESMA, participants conversed about the potential impact of the blockchain on mainstream financial services. The agency first issued a call for information on the technology in April 2015.

During opening remarks, Jean-Paul Servais of Belgium’s Financial Services and Markets Authority touched on the subject, pointing to both the risks and opportunities brought about as more financial firms consider using the technology.

"There could be opportunities here, but clearly also risks while these mechanisms are not well understood and generally operating outside regulation," he said.

Later, Adrian Blundell-Wignall, a special advisor to the intergovernmental economic group Organisation for Economic Co-operation and Development (OECD), remarked that, from his perspective, the risk of digital currencies being used by terrorist financiers warrants stricter regulation, but not at the expense of innovation.

"Terrorism finance, money laundering and illicit trade are all reasons to strictly regulate this space. However, we need to be careful not to curb the technological innovation in this area," he said.

A panel held during the event focused specifically on distributed ledgers, asking the question: "Will [they] materially disrupt the existing trade lifecycle?"

Participants included UBS Lab chief Alex Batlin, Digital Asset Holdings CEO Blythe Masters, Setl COO Peter Randall, ECB senior advisor Wiebe Ruttenberg and Federal Reserve Board macroeconomic analysis chief John Schindler.

In closing remarks, ESMA executive director Verena Ross touched on aspects of the talk:

"We as regulators should prepare for those changes to come," Ross added.

Paris image via Shutterstock