In a coordinated effort that underscores the growing momentum behind digital asset innovation, a coalition of major market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and several other European trading venues—has formally appealed to European Union regulators to either remove the existing ceiling on tokenised assets or substantially increase it within the framework of the EU’s ongoing tokenisation pilot programme. The coalition argues that the current limit, which caps the total value of tokenised securities that can be issued under the pilot, is far too restrictive to accommodate the scale and ambition of projects already underway across the continent. The tokenisation pilot, launched by the European Commission in 2023, was designed as a sandbox environment to test the regulatory, technical, and market‑infrastructure challenges associated with issuing and trading tokenised securities on distributed ledger technology (DLT).
Participants in the pilot are allowed to issue tokenised assets up to a maximum aggregate value of €5 billion, a figure that the coalition contends was set based on early, conservative estimates of market interest. Since the pilot’s inception, however, a number of high‑profile initiatives have quickly outgrown that ceiling. One illustrative example comes from a cross‑border bond issuance that combines traditional euro‑denominated debt with a tokenised layer on a permissioned blockchain. The project, coordinated by a consortium of banks and fintech firms, aims to raise €1.2 billion to finance renewable‑energy infrastructure in Southern Europe.
While the underlying bond issuance comfortably fits within the pilot’s aggregate limit, the tokenised tranche alone already exceeds the cap when combined with other parallel projects, such as a tokenised equity offering by a German automotive supplier and a token‑based venture‑capital fund targeting AI startups in the Nordics. Together, these initiatives represent more than €8 billion in tokenised value, clearly surpassing the current ceiling.
Beyond sheer volume, the coalition emphasizes that the cap hampers innovation in several critical dimensions. First, it limits the ability of issuers to experiment with multi‑asset token structures that blend debt, equity, and revenue‑share components into a single digital instrument.
Such hybrid tokens are seen as a key use case for DLT because they can automate complex cash‑flow waterfalls through smart contracts, reducing settlement risk and operational costs. Second, the ceiling restricts the development of secondary‑market liquidity solutions. Market makers and custodians have signalled that they are reluctant to allocate resources to token‑based trading venues unless they can be assured of a sufficiently deep pool of underlying assets. A higher or removed cap would encourage a virtuous cycle: more issuers would enter the space, liquidity providers would respond, and investors would gain confidence in the robustness of the market.
Regulators, for their part, have expressed a cautious stance. The European Securities and Markets Authority (ESMA) has highlighted the need to safeguard investor protection, ensure market integrity, and prevent systemic risk.
The coalition acknowledges these concerns but argues that the pilot’s sandbox nature already provides a controlled environment in which risks can be monitored and mitigated. Moreover, the coalition points out that existing EU financial‑services regulations—such as MiFID II, the Prospectus Regulation, and the Markets in Crypto‑Assets (MiCA) framework—already contain provisions that can be applied to tokenised securities, reducing the need for a separate, overly restrictive cap. In its formal request, the coalition proposes three concrete options for the EU: 1. **Complete removal of the aggregate cap** – allowing tokenised issuances to scale organically based on market demand, with oversight mechanisms remaining in place to monitor systemic exposure.
2. **Significant increase of the cap to €15 billion** – a figure that reflects the combined projected issuance volume of the coalition’s members over the next two years, while still providing a clear upper bound for regulators.
3. **Implementation of a tiered‑cap system** – where the ceiling is linked to measurable criteria such as the number of participating issuers, the diversity of asset classes, or the demonstrated robustness of market‑infrastructure providers. The coalition also stresses the importance of regulatory clarity beyond the cap itself.
It calls for harmonised guidance on token classification, custody standards, and the treatment of token‑based dividends and interest payments under existing tax regimes. By addressing these ancillary issues in tandem with the cap, the EU can create a more predictable and attractive environment for both domestic and international investors. Stakeholders outside the immediate coalition have voiced support for the request.
Several national financial ministries have indicated that a higher cap could bolster Europe’s competitiveness against the United States and Asia, where tokenisation initiatives are already attracting substantial private‑capital inflows. Meanwhile, investor advocacy groups have warned that a too‑low ceiling could push innovative projects into less‑regulated jurisdictions, potentially exposing investors to higher fraud risk. In summary, the coalition’s appeal reflects a broader tension between the desire to foster cutting‑edge financial technology and the imperative to maintain rigorous oversight.
By lifting or substantially raising the tokenisation pilot’s aggregate limit, the EU would enable a growing ecosystem of tokenised securities to mature, deliver on promises of faster settlement, lower costs, and greater accessibility, and ultimately position Europe as a leader in the digital transformation of capital markets. The request is now under review by the European Commission and ESMA, with a decision expected later this year.
Should the EU adopt a more flexible stance, the tokenisation landscape in Europe could see a rapid expansion, unlocking new sources of capital for businesses and novel investment opportunities for a wider range of market participants.