A securities exchange trade organization has submitted a letter to the EU’s top markets regulator that offers input on how it should regulate the use of blockchain.

The response, sent last week by the World Federation of Exchanges (WFE) to the European Securities and Markets Authority (ESMA), comes more than a year after the agency began soliciting information from stakeholders on the technology.

The letter, which indicated overall support for the ESMA’s involvement in the space, argues that the technology shouldn’t fully replace the existence of third-parties in the market – an argument at odds with systems like bitcoin which are, at their heart, devoid of third parties.

The organization notes:

“We believe that, while DLT can bring significant benefits to the industry, risks must nevertheless be managed carefully in order to ensure the concept of a trusted, neutral, third party will remain at the heart of well-functioning markets.”

A recent WFE survey found that a majority of the organization’s members are in some stage of blockchain testing, however according to the letter, regulatory and legal issues remain a hindrance to development.

“It is important to have certainty regarding the legal status of digitized assets as a means of transferring and granting security over interests in such assets as well as treatment in insolvency, and applicability of insolvency protection,” the WFE continues.

The ESMA has received a number of submissions from various stakeholders in the past year, including Italian banking group Intesa Sanpaolo. Members of the blockchain industry, including nonprofit advocacy group Coin Center, have also weighed in during the process.

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