In a coordinated appeal to European regulators, a group of leading financial institutions—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other market participants—have called on the European Union to either eliminate or substantially increase the current cap that governs the tokenisation pilot programme. This request stems from growing concerns that the existing limit, set at a modest level, is quickly being outstripped by the scale and ambition of several high‑profile projects already underway across the continent.
Tokenisation, the process of converting real‑world assets into digital tokens that can be recorded, transferred, and settled on distributed ledger technology, has been championed by the EU as a means to modernise capital markets, improve liquidity, and broaden investor access. To test the practical implications of this emerging technology, the European Commission launched a sandbox‑style trial in early 2023, imposing a maximum aggregate value of €1 billion for tokenised securities issued under the pilot. The intention was to provide a controlled environment in which regulators could observe market behaviour, assess systemic risk, and refine the legal framework before broader adoption.
However, as the pilot has progressed, participants report that the €1 billion ceiling is now acting as a bottleneck. Several projects—ranging from tokenised corporate bonds and equity shares to real‑estate and infrastructure assets—have already reached or exceeded the cap, forcing issuers to either truncate their offerings or delay launch plans. In a joint statement, the coalition highlighted specific cases where the limit has directly hindered market development.
For instance, a consortium of German banks aiming to tokenise a portfolio of mid‑size enterprise loans reported that the cap would force them to split the issuance into multiple, less efficient tranches, eroding the economies of scale that tokenisation promises. The signatories argue that a higher or removed cap would unlock several benefits.
First, it would allow issuers to fully exploit the cost‑efficiency and speed advantages of blockchain‑based settlement, which are most pronounced when dealing with larger volumes. Second, a larger pool of tokenised assets would attract a broader base of investors, including retail participants who are increasingly interested in fractional ownership and diversified exposure.
Third, by enabling more substantial pilots, regulators would gain richer data on market dynamics, risk patterns, and operational challenges, thereby facilitating the creation of a robust, proportionate regulatory regime. Beyond the immediate practicalities, the coalition frames its request within the broader strategic context of Europe’s ambition to become a global leader in digital finance.
The EU’s Digital Finance Strategy, published in 2020, set out a roadmap for integrating innovative technologies such as distributed ledger technology into the financial ecosystem. A restrictive cap, they contend, runs counter to that vision, potentially ceding ground to jurisdictions like the United States or Singapore, where regulatory sandboxes have been more permissive and have already attracted sizable tokenisation projects. Critics of raising the cap caution that larger tokenised offerings could amplify systemic risk if not accompanied by appropriate safeguards.
They point to concerns about market fragmentation, the need for clear custody solutions, and the importance of anti‑money‑laundering controls in a digital environment. In response, the coalition emphasizes that the pilot’s governance structure already includes rigorous oversight mechanisms, including real‑time monitoring by supervisory authorities, mandatory reporting, and the requirement that all participants adhere to existing securities law.
To address these concerns while still advancing the pilot’s objectives, the coalition proposes a tiered approach. Under this model, the cap would be raised incrementally based on predefined milestones, such as the successful completion of a certain number of tokenised issuances without incident, or the demonstration of robust risk‑management frameworks by participating firms. This would provide regulators with confidence that the market can scale responsibly, while giving issuers the flexibility to grow their projects. The request has already sparked a lively debate within EU institutions.
The European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) has indicated openness to reviewing the cap, noting that the pilot’s data collection phase is ongoing and that stakeholder feedback is a key input to policy adjustments. Meanwhile, the European Securities and Markets Authority (ESMA) has called for a thorough impact assessment before any amendment, to ensure that investor protection remains paramount. In summary, Nasdaq, Börse Stuttgart, and their allied partners are urging the EU to reconsider the tokenisation pilot’s financial ceiling.
They argue that the current limit is already being outgrown, that a higher cap would unleash the full potential of digital securities, and that a measured, data‑driven approach can mitigate any additional risks. As the dialogue continues, the outcome will likely shape the trajectory of Europe’s digital finance landscape for years to come.