Nasdaq, Stuttgart Stock Exchange and Other Market Players Urge EU to Lift or Raise Cap in Tokenisation Pilot

In recent weeks, a coalition of leading financial market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other prominent institutions—has formally appealed to European Union regulators to either remove the existing ceiling on tokenised assets in the EU’s experimental tokenisation framework or, at the very least, raise it to a level that reflects the rapid growth of the market. The request stems from a growing consensus among market actors that the current cap, which limits the total value of tokenised assets that can be issued under the pilot programme, is far too restrictive for the ambitions of the European digital‑finance ecosystem. The tokenisation pilot, launched by the European Commission as part of its broader digital finance strategy, was designed to test the feasibility of issuing securities and other financial instruments in a tokenised form on distributed ledger technology (DLT) platforms. The pilot’s original parameters set a maximum aggregate value of €1 billion for all tokenised assets issued during the trial period.

While the figure was intended as a cautious starting point, the coalition now contends that it no longer reflects the scale and momentum of real‑world projects that have already begun to emerge across the continent. According to a joint statement released by the coalition, several ongoing European tokenisation projects have already exceeded the €1 billion threshold.

For example, a cross‑border bond issuance platform based in Luxembourg has successfully tokenised €1.2 billion of sovereign and corporate debt, while a German fintech consortium has launched a tokenised equity fund that has attracted €850 million in commitments. These examples illustrate that the market’s appetite for tokenised securities is already outpacing the regulatory ceiling, creating a situation where promising projects risk being forced to halt or scale back their activities simply because they have hit an artificial limit. Beyond the immediate practical concerns, the coalition argues that the cap undermines the EU’s strategic objectives for digital finance. The European Commission has repeatedly highlighted the importance of fostering innovation, improving market efficiency, and enhancing cross‑border capital flows through the use of DLT and tokenisation.

By keeping the cap at a level that restricts the total value of tokenised assets, regulators risk sending a mixed signal to investors and innovators, potentially driving capital to more permissive jurisdictions outside the EU. In its appeal, the coalition put forward several concrete arguments in favour of lifting or raising the cap: 1. **Market Maturity**: The tokenisation landscape has matured significantly since the pilot’s inception.

Institutional investors, asset managers, and corporations now have a clearer understanding of the legal, operational, and technological frameworks required to issue and trade tokenised assets safely. This maturity reduces the regulatory risk that originally justified a low ceiling. 2.

**Liquidity Benefits**: Higher‑value tokenised assets can attract a broader pool of liquidity providers, including global hedge funds and sovereign wealth funds, which are often reluctant to engage with low‑volume markets. Removing the cap would enable larger issuances that can generate deeper order books and tighter spreads, benefiting all market participants. 3.

**Regulatory Alignment**: Other major financial hubs, such as Singapore, Switzerland, and the United Arab Emirates, have already adopted more flexible approaches to tokenisation, allowing issuances well beyond €1 billion. Aligning the EU’s framework with these jurisdictions would help maintain its competitiveness on the global stage. 4.

**Innovation Incentives**: A higher cap—or its removal—would provide a stronger incentive for fintech startups and traditional financial institutions to develop new tokenised products, ranging from real‑estate-backed tokens to tokenised carbon credits. This could spur job creation, attract venture capital, and accelerate the development of ancillary services such as custodial solutions, compliance tools, and secondary‑market platforms.

5. **Risk Management**: The coalition emphasised that the pilot already incorporates robust supervisory mechanisms, including real‑time monitoring, mandatory reporting, and the involvement of national competent authorities.

These safeguards mitigate systemic risk, meaning that a higher cap does not necessarily translate into higher systemic vulnerability. The coalition’s request also includes a proposal for a graduated increase in the cap, should regulators prefer a phased approach. They suggest an initial raise to €5 billion, followed by periodic reviews every six months to assess market development and adjust the limit accordingly. This incremental strategy would allow regulators to monitor the impact of larger tokenised issuances while still providing the market with the flexibility it needs to grow.

EU regulators have responded with cautious openness. In a recent briefing, a senior official from the European Securities and Markets Authority (ESMA) acknowledged the coalition’s points and indicated that the Commission is reviewing the pilot’s parameters as part of its ongoing evaluation of the Digital Finance Package. The official noted that any amendment to the cap would need to balance the desire for innovation with the mandate to protect investors and ensure market stability. Stakeholders outside the immediate coalition have also weighed in.

Consumer‑rights groups have expressed concerns that larger tokenised offerings could expose retail investors to complex products they may not fully understand. In response, the coalition has pledged to enhance disclosure standards and to develop educational resources aimed at improving financial literacy around tokenised assets.

Looking ahead, the outcome of this request could have far‑reaching implications for the future of European capital markets. If the cap is lifted or substantially raised, the EU could witness a surge in tokenised issuances, potentially unlocking billions of euros in new financing for companies, infrastructure projects, and sustainable investments. Conversely, maintaining a low ceiling could slow the adoption of DLT‑based securities, prompting innovators to seek more accommodating environments elsewhere.

In summary, Nasdaq, Börse Stuttgart, and their allied partners are urging EU policymakers to reconsider the tokenisation pilot’s current monetary ceiling. Their argument rests on concrete evidence that the market has already outgrown the €1 billion limit, on the strategic importance of fostering a vibrant digital‑finance ecosystem, and on the existence of strong supervisory tools that can manage the associated risks. The decision that European regulators make in the coming months will likely shape the trajectory of tokenised finance in Europe for years to come.