In recent weeks, a coalition of prominent market participants—including Nasdaq, the Stuttgart Stock Exchange, and a number of other leading institutions—has formally appealed to European regulators to either eliminate the existing ceiling on tokenisation projects or to raise it substantially. Their request stems from growing concerns that the current cap, set as part of the European Union’s experimental framework for digital asset tokenisation, is overly restrictive and hampers the development of innovative financial products that could benefit the broader economy. The tokenisation pilot, which was introduced under the EU’s broader digital finance strategy, aims to test how traditional securities such as equities, bonds, and real‑estate assets can be represented as digital tokens on distributed ledger technology (DLT) platforms.
By doing so, regulators hope to assess the operational, legal, and consumer‑protection implications of moving parts of the securities market onto blockchain‑based infrastructures. However, the pilot includes a hard limit on the total market value of assets that may be tokenised during the trial period.
This ceiling was originally intended to keep the experiment manageable and to limit systemic risk while the regulatory framework is still being refined. Nasdaq, which has been actively exploring blockchain solutions for settlement and post‑trade services, argues that the cap is now a bottleneck.
In its submission to the European Commission, Nasdaq points out that several of its own tokenisation projects, as well as those of its partners, already exceed the permissible threshold. The exchange notes that the cap not only curtails the scale of pilot initiatives but also discourages market participants from committing the necessary resources to develop robust, compliant tokenisation solutions.
"If the EU wishes to foster a thriving digital securities market, it must provide a regulatory sandbox that reflects the real‑world size and complexity of the assets we aim to digitise," the statement reads. The Stuttgart Stock Exchange (Börse Stuttgart) echoes these concerns.
As one of Europe’s most active venues for trading tokenised securities, the Stuttgart exchange has already facilitated the issuance of digital shares for a range of companies, including small‑ and medium‑sized enterprises seeking alternative financing routes. According to its report, the current cap limits the total face value of tokenised securities that can be listed on its platform, forcing the exchange to either reject promising projects or to fragment larger offerings into multiple smaller tokens, which adds operational overhead and reduces market efficiency. Beyond the immediate participants, a broader coalition of banks, fintech firms, and asset managers has signed onto the appeal. Their collective position is that the cap, which was set at a modest €5 billion (or a comparable figure in other currencies), no longer reflects the appetite of the market nor the pace of technological adoption.
Several pilot projects already report tokenised asset values that exceed this figure, indicating that the cap is being breached in practice despite the regulatory limits. The coalition therefore recommends either removing the ceiling altogether—allowing the pilot to operate without a predefined upper bound—or, at a minimum, raising it to a level that accommodates the scale of existing and foreseeable tokenisation initiatives.
The regulators, for their part, have acknowledged the feedback. In a recent press release, the European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG‑FIN) stated that it will review the cap as part of the ongoing assessment of the tokenisation pilot.
The Commission emphasised that any adjustment must balance the need for innovation with the imperative to protect investors and maintain market stability. It also highlighted that the pilot is designed to be flexible and that stakeholder input is a critical component of its iterative design. If the cap is lifted or increased, several potential benefits could emerge.
First, larger and more diverse asset classes could be brought onto DLT platforms, ranging from mid‑cap equities to infrastructure bonds, thereby expanding the pool of investors who can access tokenised securities. Second, economies of scale would likely reduce transaction costs, as the fixed costs of building and maintaining blockchain infrastructure would be spread over a greater volume of assets. Third, a higher cap would enable more comprehensive testing of cross‑border tokenised securities, providing valuable data on how different national legal regimes interact within a unified digital market.
Conversely, critics caution that a higher cap could expose the pilot to greater systemic risk if the underlying regulatory safeguards are not yet fully mature. They argue that the EU should ensure that robust AML/CFT controls, clear custody rules, and effective dispute‑resolution mechanisms are in place before expanding the scope of the experiment. The coalition acknowledges these concerns and proposes a phased approach: an initial increase in the cap accompanied by stricter reporting requirements and enhanced supervisory oversight. In summary, the request from Nasdaq, the Stuttgart Stock Exchange, and their allied partners reflects a growing consensus that the EU’s tokenisation sandbox must evolve to keep pace with market demand and technological progress.
By either removing the existing ceiling or raising it to a more realistic level, regulators would enable a richer set of experiments, foster greater innovation, and ultimately lay the groundwork for a more efficient, inclusive, and resilient digital securities market across Europe. The upcoming decision by the European Commission will be closely watched by industry participants worldwide, as it will signal the EU’s commitment to leading the next wave of financial digital transformation.