In recent weeks, a coalition of major market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a range of other financial institutions—has formally appealed to the European Union to either eliminate the current ceiling on tokenised assets or at least raise it substantially. This request emerges from growing concerns that the existing limit, set as part of the EU’s experimental framework for tokenisation, is stifling innovation and preventing the full realisation of the technology’s potential across the continent.
Tokenisation, the process of converting real‑world assets—such as equities, bonds, real estate, or even commodities—into digital tokens on a blockchain or distributed ledger, promises to bring unprecedented efficiency, transparency, and accessibility to capital markets. By breaking down assets into smaller, tradable units, tokenisation can democratise investment opportunities, lower transaction costs, and accelerate settlement times from days to mere seconds.
However, the EU’s pilot programme, launched to test the regulatory waters surrounding these new digital instruments, imposes a cap on the total value of tokenised assets that can be issued under the sandbox environment. The coalition’s warning centres on the observation that several high‑profile European projects have already reached, or are poised to exceed, the prescribed limit. For instance, a cross‑border tokenised bond issuance involving German and French issuers quickly approached the ceiling, forcing the participants to either truncate the offering or seek alternative, more cumbersome regulatory routes. Similarly, a tokenised real‑estate fund managed by a consortium of Scandinavian investors hit the cap within months of launch, prompting concerns that the limit could deter future projects from even attempting tokenisation under the EU framework.
In their joint statement, the signatories argue that the cap, originally intended as a precautionary measure to manage risk during the early stages of experimentation, now acts as a bottleneck that hampers scalability. They point out that the pilot’s purpose is precisely to gather data on how tokenised markets operate at scale, yet the artificial ceiling prevents the collection of robust, representative data. Without the ability to observe larger‑volume transactions, regulators may struggle to develop nuanced policies that balance investor protection with market innovation.
Moreover, the coalition highlights the competitive disadvantage that the EU faces relative to other jurisdictions that have adopted more flexible approaches. The United States, Singapore, and several offshore financial centres have already introduced regulatory sandboxes with higher—or no—caps, attracting a wave of fintech startups and established players eager to test tokenised products in a supportive environment.
By maintaining a restrictive limit, the EU risks losing talent, capital, and technological leadership to these more permissive markets. To address these concerns, the coalition proposes two possible pathways. The first is the outright removal of the cap, allowing tokenised issuances of any size to proceed under the pilot’s regulatory oversight. This approach would provide the most accurate picture of market dynamics and enable participants to scale their offerings organically.
The second option is a calibrated increase in the ceiling, accompanied by tiered reporting requirements that correspond to the size of the issuance. Such a tiered system would preserve regulatory vigilance while granting larger projects the latitude they need to thrive. In addition to the cap issue, the coalition calls for greater clarity on ancillary regulatory matters that intersect with tokenisation.
These include guidance on the treatment of tokenised securities under existing MiFID II rules, the application of anti‑money‑laundering (AML) and counter‑terrorist financing (CTF) obligations, and the harmonisation of tax treatment across member states. By providing a comprehensive regulatory roadmap, the EU can foster a more predictable environment that encourages long‑term investment in tokenised infrastructure.
The EU’s response to the coalition’s appeal will be closely watched by the broader fintech community. Analysts suggest that a flexible, forward‑looking stance could accelerate the adoption of tokenisation across Europe, unlocking new sources of liquidity for SMEs, enhancing cross‑border capital flows, and supporting the EU’s broader digital transformation agenda.
Conversely, a rigid adherence to the current cap may slow progress and push innovators toward more accommodating jurisdictions. In the meantime, market participants continue to explore workarounds. Some are structuring multiple smaller tokenised offerings to stay under the limit, while others are leveraging hybrid models that combine traditional securities with digital tokens.
These stop‑gap measures, however, add complexity and cost, underscoring the need for a more streamlined regulatory framework. Overall, the coalition’s message is clear: the EU’s tokenisation pilot must evolve to reflect the rapid pace of technological advancement and the growing appetite for digital assets. By either removing the existing ceiling or raising it to a level that accommodates real‑world project scales, the Union can ensure that Europe remains at the forefront of financial innovation, rather than watching from the sidelines as other regions set the pace. The upcoming discussions in Brussels will determine whether the EU will adapt its regulatory approach to meet these demands.
Stakeholders from across the continent, including banks, asset managers, technology firms, and investor groups, are expected to weigh in, providing a broad perspective on the benefits and risks of a more permissive tokenisation regime. The outcome will likely shape the trajectory of digital finance in Europe for years to come.