In recent weeks, a coalition of leading financial market participants—including Nasdaq, the Börse Stuttgart, and a number of other prominent exchanges and technology providers—has formally appealed to European Union regulators to either remove the existing ceiling on tokenised assets or to raise it substantially. Their request stems from growing concerns that the current cap, which limits the total value of assets that can be included in the EU’s tokenisation sandbox, is far too restrictive for the pace at which the market is evolving. The coalition argues that the cap not only hampers innovation but also places Europe at a competitive disadvantage compared to other jurisdictions that have adopted more flexible approaches to digital asset experimentation.
The tokenisation sandbox was introduced by the European Commission as part of a broader strategy to foster the development of distributed ledger technology (DLT) and to create a safe environment where new financial products could be tested without the full weight of existing regulatory constraints. Under the sandbox’s rules, participants are allowed to issue tokenised representations of securities, commodities, or other assets, but the total aggregate value of these tokens cannot exceed a preset limit.
This limit was originally intended as a precautionary measure, designed to contain risk while regulators gathered data on how tokenised markets operate. However, the coalition now points out that the original rationale for the cap no longer holds.
Several pilot projects that have already been approved under the sandbox have quickly approached, and in some cases exceeded, the current threshold. For instance, a cross‑border bond issuance tokenised on a DLT platform by a consortium of banks in Germany and France has already reached a valuation that pushes the limits of the sandbox’s allowance. Similarly, a tokenised real‑estate fund launched in the Netherlands has attracted investor interest that would place its token supply well beyond the permitted ceiling if the cap remained unchanged. In their joint statement, the coalition emphasizes three core arguments for raising or removing the cap.
First, they note that the cap stifles the ability of issuers to scale their projects. Tokenisation is most valuable when it can be applied to sizable asset classes, allowing for greater liquidity, fractional ownership, and broader market participation. A low ceiling forces projects to remain artificially small, limiting the economic benefits that tokenisation can deliver. Second, the coalition argues that the cap creates an uneven playing field within Europe.
While some EU member states have introduced national sandbox programs with more generous limits—or no limits at all—participants operating under the EU‑wide framework are constrained. This discrepancy encourages firms to gravitate toward jurisdictions with looser restrictions, potentially diverting innovation and investment away from the broader European market. Third, the coalition highlights that other major financial centres outside the EU, such as the United States, Singapore, and certain Asian economies, have already adopted more permissive sandbox regimes. These regions are witnessing rapid growth in tokenised securities, decentralized finance (DeFi) applications, and hybrid financial products that blend traditional and digital assets.
By maintaining a restrictive cap, the EU risks falling behind in the global race to set standards for the next generation of financial markets. To support their request, the coalition has provided a series of data points and case studies illustrating the practical implications of the current limit. They show that, in the first six months of the sandbox’s operation, the total value of tokenised assets issued was already within 10 percent of the cap. Moreover, they project that, if the cap were lifted or significantly increased, the sandbox could accommodate an additional €5‑10 billion in tokenised transactions within the next year alone.
This projection is based on the pipeline of projects that have been submitted for approval but are currently on hold due to the cap. Regulators, for their part, have responded with cautious openness.
The European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) has acknowledged the coalition’s concerns and indicated that it will review the sandbox’s parameters as part of its ongoing assessment of the Digital Finance Package. In a recent press briefing, a senior official from DG FISMA noted that the Commission is “committed to ensuring that regulatory sandboxes provide enough flexibility to foster innovation while still protecting investors and maintaining market integrity.” The upcoming review is expected to consider not only the cap but also other aspects of the sandbox, such as the duration of approvals, the scope of permissible token types, and the reporting requirements for participants.
Stakeholders have been invited to submit comments during a public consultation period that will run for the next 60 days. The coalition has pledged to provide additional feedback, including proposals for a tiered cap system that would allow larger projects to operate under a higher threshold while keeping smaller pilots under the original limit. If the EU decides to raise the cap, several immediate effects are likely to follow. Token issuers would be able to launch larger offerings, attracting institutional investors who require a certain scale to justify participation.
Market makers could provide deeper liquidity, reducing spreads and improving price discovery for tokenised assets. Moreover, the increased scale could accelerate the development of secondary markets for tokens, as larger pools of assets become tradable on regulated platforms. Conversely, if the EU chooses to maintain the status quo, the coalition warns that Europe could see a slowdown in tokenisation activity, with innovators potentially relocating to more permissive jurisdictions.
This could result in a loss of expertise, talent, and capital that would otherwise contribute to the EU’s digital finance ecosystem. In summary, the coalition’s appeal reflects a broader tension within the European regulatory landscape: the need to balance prudent oversight with the desire to nurture cutting‑edge financial technology. By reconsidering the tokenisation sandbox’s cap, the EU has an opportunity to demonstrate that it can adapt its regulatory framework to the realities of a rapidly evolving market, thereby securing its position as a leader in the global digital finance arena.