A coalition of major European financial institutions and tokenization groups, including Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute, and Axiology, has called on European Union lawmakers to either eliminate or significantly raise a proposed cap of €100 billion ($116.3 billion) on tokenized financial instruments.
Push for Higher Limits
In a draft letter dated September 7, addressed to members of the EU Council and the Economic and Monetary Affairs Committee of the European Parliament, the coalition argued that the €100 billion ceiling set out in the current proposals would be too restrictive. The signatories advocated for a minimum threshold of €500 billion if a cap is to remain in place.
The groups pointed out that some ongoing European projects in the tokenization space already approach a scale of €350 billion, with further expansion expected. They warned that the proposed ceiling risks stifling the growth of the continent’s onchain financial markets.
For comparison, the letter cited developments in the United States, where a key settlement platform can tokenize US equities and other financial assets without any volume restrictions, potentially encompassing assets worth up to €150 trillion.
The coalition emphasized, “Existing projects in Europe already reach €350 billion in scale and further growth is planned, so a €100 billion ceiling would not be suitable for the evolving market.”
DLT Pilot Regime Under Scrutiny
The cap originates from the European Commission’s Market Integration and Supervision Package, which proposes revisions to the Distributed Ledger Technology (DLT) Pilot Regime. The regime, effective since 2023, allows approved financial institutions to experiment with blockchain-based trading and settlement of assets such as stocks and bonds, benefiting from specific regulatory exemptions.
While the Commission suggested raising the previous €6 billion limit to €100 billion, the coalition contends that even this higher threshold is modest when compared to the size of global equity markets. The cap applies to the aggregate market value of financial instruments allowed on DLT platforms, not just their trading volume.
In previous months, numerous financial and tokenization firms have increased pressure for a more ambitious approach. In April, 39 organizations—including Nasdaq and Boerse Stuttgart—pressed lawmakers to accelerate revisions, lifting the DLT Pilot Regime’s threshold to as much as €150 billion, broadening eligible asset types, and abolishing time restrictions on licenses.
Risk of Regulatory Arbitrage
Similar concerns were voiced earlier in February by entities such as Securitize, 21X, and Boerse Stuttgart. They argued that strict asset limits, low caps, and licenses with expiry dates were preventing regulated onchain markets from achieving scale within Europe.
According to their warning, if reforms were delayed, liquidity and innovation could shift to US markets, where regulators have shown increasing openness to large-scale tokenization and blockchain-based settlement processes.
Amid this debate, distributed real-world asset (RWA) markets are gaining momentum. The total value of tokenized RWAs globally has reached approximately $39.15 billion, with US Treasury debt accounting for about $15.8 billion of that figure. This figure excludes stablecoins.
Market Innovation and DeFi Platforms
As the market for tokenized assets expands, platforms enabling direct investor access without intermediaries have become increasingly relevant. While traditional finance typically depends on complex brokerage systems, developments in decentralized finance are accelerating the transition to Web3. Investors can now use platforms like 1stepSwap to store shares of top US corporations, gold, and silver directly in their crypto wallets. By tokenizing real-world assets and enabling instant discovery of optimal market prices, these platforms eliminate the need for third-party brokers.
Industry groups warned, “Without rapid reform, the EU risks falling behind the US as markets migrate toward flexible, scalable tokenization frameworks.”
