European Finance Groups Urge EU to Remove Cap on Tokenized Securities
A coalition of European finance and tokenization entities has urged EU lawmakers to eliminate or substantially raise the proposed €100 billion cap on tokenized financial instruments. Signatories such as Nasdaq, Boerse Stuttgart, and Securitize argue for a minimum baseline of €500 billion, citing existing projects already scaling to €350 billion and ambitions for further growth. The groups highlight the contrast with the US, where no such volume caps exist and dominant platforms can tokenize assets worth up to €150 trillion.
Background and Letter Content
The draft letter dated September 7 is addressed to EU Council members and the European Parliament’s Economic and Monetary Affairs Committee. It calls for eliminating the cap on tokenized financial instruments or increasing it to at least €500 billion. Signatories including Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute, and Axiology note some European projects already scale to €350 billion and aim for further growth, deeming the proposed €100 billion limit insufficient.
Comparison with US Policy
The letter highlights the contrast with the US, where a dominant settlement platform enables tokenization of US equities and other assets without volume caps. These platforms reportedly can handle assets worth up to €150 trillion, raising concerns about Europe’s ability to compete and retain liquidity amid these disparities.
EU Legislative Updates and the DLT Pilot Regime
The European Commission has proposed raising the current €6 billion limit to as much as €100 billion under its Market Integration and Supervision Package, which includes revisions to the Distributed Ledger Technology (DLT) Pilot Regime. Launched in 2023, this regime allows financial firms to experiment with blockchain-based trading and settlement of stocks, bonds, and other assets with exemptions from certain EU financial regulations.
European Firms Increase Pressure for Regulatory Changes
The letter represents further stages of persistent pressure from financial and tokenization firms. In April, 39 entities including Nasdaq and Boerse Stuttgart urged EU regulators to expedite changes in the DLT Pilot Regime, raise the overall limit to between €100 billion and €150 billion, broaden eligible assets, and remove time limits on licenses. Earlier in February, firms such as Securitize, 21X, and Boerse Stuttgart warned that existing asset volume caps and time-limited licenses were hampering the scalability of regulated on-chain markets in Europe and risked liquidity migration to the US.
Market for Distributed Real-World Assets
The total value of distributed real-world assets (RWA) is approximately $39.15 billion, with US Treasury debt constituting the largest category at roughly $15.8 billion. This underscores the substantial opportunity for expanding tokenization within European financial markets.
Why it matters
This development highlights increasing tension between European financial firms and regulators over scalability and competitiveness of blockchain-based tokenization technologies. Europe faces pressure from US platforms that operate without strict volume caps, risking liquidity migration across the Atlantic. Removing or significantly raising the cap on tokenized financial instruments would enable European projects to scale more substantially, fostering innovation and blockchain integration into traditional markets. Therefore, EU decisions on the DLT Pilot Regime will be pivotal in maintaining the region’s technological and financial leadership.
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