In a coordinated effort that underscores the growing importance of digital assets in traditional finance, Nasdaq, the Börse Stuttgart, and a number of other market participants have formally appealed to the European Union to either eliminate the existing ceiling on tokenised securities or to raise it substantially. Their joint statement, issued earlier this week, highlights a fundamental tension between the regulatory framework currently governing the tokenisation pilot and the rapid pace of innovation taking place across the continent. The tokenisation pilot, launched by the EU in 2022, was designed as a sandbox environment where financial institutions could experiment with issuing, trading, and settling tokenised assets under a controlled set of rules.
One of the key parameters of the sandbox is a cap on the total value of tokenised securities that can be issued by any single participant. This limit was originally set at a modest €5 billion, a figure that regulators believed would be sufficient to test the technology without exposing the market to undue risk.
However, as the pilot has progressed, the participating firms argue that the ceiling has become a bottleneck that stifles the very experimentation the sandbox was meant to encourage. "We have observed several projects within the EU that have already reached, and in some cases exceeded, the current cap," the coalition wrote in their letter to the European Commission and the European Securities and Markets Authority (ESMA).
"Continuing to enforce this limit would not only hinder the development of innovative financial products but also place European market participants at a competitive disadvantage relative to jurisdictions such as the United States and Singapore, where regulatory thresholds are more accommodating." The signatories cite concrete examples to illustrate their point. At the Börse Stuttgart, a pilot involving tokenised shares of a mid‑cap German industrial firm has already attracted investor interest worth approximately €6 billion, surpassing the EU‑wide ceiling. Similarly, Nasdaq’s collaboration with a consortium of Nordic banks on a cross‑border tokenised bond platform has generated commitments that exceed €7 billion.
These projects demonstrate that market demand for tokenised securities is far greater than the current regulatory ceiling would allow. Beyond the immediate financial figures, the coalition emphasizes the broader strategic implications of maintaining a low cap.
Tokenisation promises to increase market liquidity, reduce settlement times, and lower transaction costs by leveraging blockchain and distributed ledger technologies. By restricting the scale at which these benefits can be realised, the EU risks slowing down the adoption of a technology that could reshape capital markets globally. Moreover, the coalition warns that a restrictive cap could drive innovative firms to relocate their tokenisation activities to more permissive jurisdictions, resulting in a loss of talent, investment, and future tax revenue for Europe. In response to these concerns, the coalition proposes two possible regulatory adjustments.
The first option is the outright removal of the cap, allowing participants to issue tokenised securities without a predefined ceiling, subject only to existing prudential safeguards such as anti‑money‑laundering checks and investor protection rules. The second, more moderate, option is to raise the cap to a level that reflects current market activity—suggested at €20 billion—while maintaining a mechanism for periodic review and adjustment based on empirical data gathered from the pilot. Regulators have so far acknowledged the coalition’s arguments but have stressed the need for a balanced approach.
ESMA’s spokesperson noted that while the authority is keen to foster innovation, it must also ensure that systemic risk remains contained. "Any modification to the tokenisation cap will be evaluated against a comprehensive risk assessment framework," the spokesperson said. "We will consider factors such as market depth, participant solvency, and the robustness of the underlying technology platforms." The debate unfolds against a backdrop of increasing legislative activity at the EU level. The Markets in Crypto‑Assets Regulation (MiCA), which is set to become fully applicable later this year, aims to create a harmonised regime for crypto‑assets, including tokenised securities.
The outcome of the cap discussion could have a direct impact on how MiCA is interpreted and enforced, especially concerning the definition of “financial instrument” and the scope of permissible issuance volumes. Industry observers suggest that the coalition’s request is likely to gain traction, given the demonstrable economic benefits of scaling tokenisation projects.
A recent study by the European Banking Authority estimated that expanding tokenised markets could add up to €150 billion in annual liquidity to European equity markets, while also cutting settlement costs by up to 30 percent. These figures provide a compelling economic argument for policymakers to reconsider the current ceiling. In the coming weeks, the European Commission is expected to convene a series of stakeholder meetings to discuss the proposed amendments.
The outcome will not only affect the participants of the current pilot but also set a precedent for future digital‑asset initiatives across the EU. Should the cap be lifted or significantly increased, it could accelerate the rollout of tokenised products such as fractional ownership of real‑estate, infrastructure projects, and even art, thereby broadening investment opportunities for both retail and institutional investors. For now, Nasdaq, the Börse Stuttgart, and their allies remain optimistic that their appeal will be heard.
They argue that a flexible, forward‑looking regulatory environment is essential for Europe to maintain its position as a global financial hub in the age of digital transformation. By aligning the regulatory framework with the realities of market demand, the EU can unlock the full potential of tokenisation, driving efficiency, inclusivity, and innovation throughout the financial ecosystem.