In a coordinated move that underscores the growing importance of digital assets in traditional finance, a coalition of leading market operators—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and several other European exchanges—has formally appealed to European Union regulators to either remove the existing ceiling on tokenised securities or to raise it substantially. The request comes amid the EU’s broader effort to foster innovation through a controlled tokenisation pilot, a regulatory sandbox designed to test the feasibility of issuing and trading tokenised assets within a defined framework. The coalition’s letter to the European Commission and the European Securities and Markets Authority (ESMA) argues that the current cap, which limits the total value of tokenised securities that can be issued under the pilot, is far too restrictive for the market’s needs. According to the signatories, the ceiling hampers the ability of issuers to fully explore the benefits of tokenisation—such as increased liquidity, fractional ownership, and streamlined settlement processes—while also preventing the pilot from generating data that truly reflects real‑world market dynamics.
Several concrete examples illustrate why the existing limit is considered inadequate. In Germany, a consortium of banks and fintech firms has already prepared a tokenised bond issuance valued at roughly €250 million, a figure that already exceeds the current EU‑wide cap of €200 million for the pilot. Similarly, in France, a green‑energy project is poised to raise €180 million through tokenised equity, again brushing up against the ceiling. These projects, the coalition notes, are not outliers; they represent a broader trend of European issuers turning to tokenisation as a means to tap new investor bases, reduce issuance costs, and accelerate settlement cycles.
Beyond the immediate financial metrics, the coalition emphasizes the strategic importance of a more flexible cap for the EU’s competitiveness on the global stage. Other jurisdictions, notably the United States and Singapore, have adopted more permissive approaches to tokenised securities, allowing larger volumes and a wider variety of asset classes to be tokenised.
By maintaining a comparatively low limit, the EU risks ceding leadership in a sector that could become a cornerstone of future capital markets. The signatories contend that a higher or removed cap would enable the EU to gather richer data on market behaviour, operational risks, and investor protection issues, thereby informing more robust and proportionate regulation in the long term. The letter also outlines several practical benefits that a raised limit would unlock.
First, larger tokenised issuances would provide a more realistic testing ground for the integration of distributed ledger technology (DLT) with existing clearing and settlement infrastructures. This integration is essential for achieving the EU’s ambition of reducing settlement times from days to near‑real‑time, a goal that could lower counter‑party risk and free up capital for market participants. Second, a higher cap would encourage a broader set of issuers—ranging from mid‑size corporates to sovereign entities—to experiment with tokenisation, thereby diversifying the pilot’s participant base and enhancing the relevance of its findings. Critics of the coalition’s position have raised concerns about investor protection and market stability.
They argue that a sudden increase in tokenised issuance volume could outpace the development of adequate supervisory tools, potentially exposing investors to fraud or operational failures. In response, the coalition proposes a phased approach: an initial modest increase in the cap, coupled with stringent reporting requirements and real‑time monitoring by ESMA. They also suggest the establishment of a dedicated oversight committee comprising regulators, market operators, and consumer‑advocacy groups to oversee the pilot’s expansion and ensure that risk mitigation measures keep pace with growth. The EU’s tokenisation pilot, launched in early 2023, is part of the broader Digital Finance Package, which seeks to modernise financial services through the adoption of innovative technologies.
Under the pilot, participants are allowed to issue tokenised securities on approved DLT platforms, with the aim of testing interoperability, regulatory compliance, and investor onboarding procedures. While the pilot has yielded promising results—such as reduced settlement costs and improved transparency—its impact has been limited by the restrictive issuance ceiling. Looking ahead, the coalition urges the European Commission to consider the following concrete steps: (1) Immediately lift the current €200 million cap, or replace it with a dynamic threshold that can be adjusted based on market conditions; (2) Expand the list of eligible asset classes to include tokenised real‑estate, infrastructure projects, and sustainable finance instruments; (3) Provide clear guidance on cross‑border tokenised offerings to facilitate pan‑EU participation; and (4) Allocate additional resources to ESMA for the development of supervisory tools tailored to DLT‑based markets.
If the EU adopts these recommendations, the coalition believes that the region will not only accelerate the maturation of tokenised securities but also set a benchmark for responsible innovation worldwide. By allowing larger, more diverse tokenised issuances, regulators will be better positioned to observe how market participants manage liquidity, price discovery, and custody in a digital environment. This, in turn, will inform the creation of a regulatory framework that balances the need for investor protection with the desire to foster technological advancement. In summary, Nasdaq, Börse Stuttgart, and their fellow signatories are calling for a decisive policy shift that reflects the rapid evolution of capital markets.
Their appeal is grounded in concrete market data, strategic competitiveness considerations, and a clear roadmap for mitigating potential risks. As the EU continues to navigate the complexities of digital finance, the outcome of this request could shape the future trajectory of tokenisation across Europe and beyond.