In a coordinated effort that underscores the growing significance of digital asset tokenisation across Europe, a coalition of leading market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and several other prominent financial institutions—has formally petitioned the European Union to either lift the existing cap on tokenised securities or substantially increase it within the framework of the current tokenisation trial. This request emerges from a broader recognition that the regulatory ceiling, originally intended as a temporary safeguard, is now hampering the full exploitation of tokenisation’s potential to modernise capital markets, improve liquidity, and broaden investor access. The coalition’s appeal is grounded in concrete observations from ongoing projects that are already operating at or beyond the current limit.
Several European pilot programmes, many of which are backed by both public and private funding, have reported that the cap on the total value of assets that can be tokenised under the pilot is too restrictive. These projects include cross‑border tokenised bond issuances, tokenised equity offerings for mid‑size enterprises, and innovative platforms that aim to tokenise real‑world assets such as real estate, infrastructure projects, and even renewable energy certificates. In many cases, the market demand for tokenised securities has outstripped the regulatory ceiling, forcing participants to either truncate their offerings or delay launches, thereby stalling the momentum that the EU hopes to generate through the pilot. Nasdaq, as a global exchange operator with a deep‑rooted interest in digital transformation, highlighted that the cap limits the ability to demonstrate the scalability of tokenised markets.
"Our experience in the United States shows that tokenisation can dramatically reduce settlement times, cut transaction costs, and open up new classes of investors," the exchange’s spokesperson noted. "However, the current EU cap curtails the size of pilots to a point where they cannot adequately showcase these benefits to regulators, issuers, and investors alike." Similarly, Börse Stuttgart, which has been a pioneer in Europe for tokenised securities through its subsidiary, Finoa, and its own tokenised bond platform, argued that the cap undermines the competitive edge of European markets in the global race for digital finance leadership. The Stuttgart exchange pointed to specific instances where tokenised bond issuances aimed at retail investors were forced to reduce the total issuance volume, thereby limiting the diversity of investors who could participate.
"We see a clear mismatch between the ambition of the EU’s Digital Finance Strategy and the practical constraints imposed by the cap," the exchange’s representative said. Beyond the immediate concerns of market participants, the coalition also emphasized the broader economic implications of maintaining a low cap.
Tokenisation, by its nature, can democratise access to capital markets, allowing smaller investors to purchase fractional shares of high‑value assets that were previously out of reach. This democratization can stimulate a more inclusive financial ecosystem, encourage savings, and provide issuers with a broader investor base, potentially lowering the cost of capital. By keeping the cap low, the EU may inadvertently slow down these positive externalities, ceding ground to jurisdictions such as the United States and Singapore, where regulatory frameworks are more permissive and where tokenised finance is already gaining significant traction.
The coalition’s request does not come without a balanced view of risk. While they argue for a higher or removed cap, they also acknowledge the importance of maintaining robust investor protection, anti‑money‑laundering (AML) safeguards, and market integrity. To address these concerns, the coalition proposed a tiered approach: initially raising the cap to a level that reflects the actual demand demonstrated by existing pilots, while simultaneously implementing enhanced reporting and monitoring mechanisms.
They suggested that the EU could adopt a dynamic cap that adjusts based on periodic assessments of market maturity, risk metrics, and the effectiveness of supervisory tools. In addition to raising the cap, the coalition called for clearer guidance on the legal status of tokenised assets, especially concerning custody, voting rights, and dividend distribution. They argued that ambiguity in these areas creates legal uncertainty for both issuers and investors, potentially deterring participation. By providing definitive legal frameworks, the EU would not only protect market participants but also foster innovation by giving firms the confidence to develop new tokenised products.
The EU’s response to the coalition’s letter is expected to be part of a broader consultation process that the European Commission has launched to refine its Digital Finance Package. This package aims to create a harmonised regulatory environment for digital assets, including stablecoins, crypto‑assets, and tokenised securities.
The Commission has indicated that it will consider feedback from industry stakeholders, consumer groups, and member states before finalising any amendments to the tokenisation pilot’s parameters. If the EU decides to raise or eliminate the cap, the immediate impact would likely be a surge in the volume and variety of tokenised offerings across the continent. Issuers could launch larger bond issuances, tokenise a wider array of assets, and potentially attract a more diverse pool of investors, including institutional players that have been waiting for sufficient scale to justify participation.
Moreover, a higher cap would enable more robust data collection on the performance of tokenised securities, providing regulators with valuable insights into market dynamics, risk patterns, and the efficacy of existing supervisory tools. Conversely, should the EU maintain the status quo, the coalition warned that Europe risks falling behind in the rapidly evolving digital finance landscape. The coalition’s message is clear: the current cap, while perhaps appropriate at the inception of the pilot, now acts as a bottleneck that restricts innovation, limits market depth, and diminishes the EU’s ability to set global standards for tokenised finance. In summary, the joint request from Nasdaq, Börse Stuttgart, and other market participants reflects a growing consensus that the tokenisation cap, as it stands, no longer aligns with the realities of the market and the strategic objectives of the EU’s digital finance agenda.
By either raising the limit or removing it altogether, the EU would empower issuers to fully explore the benefits of tokenisation, enhance market liquidity, broaden investor participation, and solidify Europe’s position as a leader in the next generation of financial markets.