In recent weeks, a coalition of prominent financial institutions and market infrastructure providers—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other key players—has formally appealed to the European Union to either remove the existing ceiling on tokenisation activities or substantially increase it within the framework of the EU’s tokenisation pilot programme. This request stems from growing concerns that the current limit, which caps the amount of assets that can be tokenised under the pilot, is too restrictive and hampers the development of innovative financial products and services across the continent. The coalition’s letter, addressed to the European Commission and the European Parliament, outlines several core arguments for why the cap should be reconsidered. First, the signatories note that the cap—originally designed as a precautionary measure to monitor market impact and mitigate systemic risk—has become a bottleneck for projects that have already demonstrated robust compliance frameworks and strong investor demand.
Several ongoing tokenisation initiatives in Germany, France, the Netherlands, and the Baltic states are already operating at volumes that exceed the current limit, forcing them to either scale back their ambitions or seek alternative jurisdictions with more flexible regulatory environments. Second, the coalition stresses that the tokenisation landscape has evolved rapidly since the pilot’s inception. Technological advancements, such as improvements in distributed ledger technology (DLT), enhanced smart‑contract capabilities, and more sophisticated custody solutions, have dramatically reduced operational risk and increased transparency for tokenised assets. Moreover, the regulatory sandbox environment that the EU has created for the pilot has yielded valuable data and best‑practice insights, demonstrating that the market can handle larger volumes without compromising investor protection or financial stability.
Third, the letter highlights the competitive disadvantage that a low cap imposes on Europe relative to other major financial hubs. In the United States, Singapore, and Hong Kong, regulators have adopted a more permissive stance toward tokenisation, allowing higher transaction volumes and encouraging a broader range of asset classes—including real estate, private equity, and infrastructure—to be represented on blockchains.
By maintaining a restrictive ceiling, the EU risks losing innovative firms and capital to these jurisdictions, potentially slowing the continent’s overall digital finance transformation. To support their request, the coalition provides a series of data points and case studies.
For instance, a pilot project in Frankfurt that tokenises municipal bonds has already issued tokens representing €150 million in underlying debt, surpassing the current pilot cap of €100 million. Similarly, a collaborative effort between a Dutch asset manager and a German fintech firm has tokenised a portfolio of renewable‑energy assets worth €200 million, again exceeding the limit. Both projects have reported successful compliance audits, robust investor onboarding procedures, and positive feedback from supervisory authorities. The coalition also proposes a phased approach to raising the cap, rather than an outright removal.
They suggest an incremental increase—perhaps to €250 million, then €500 million—coupled with additional reporting requirements and risk‑monitoring mechanisms. This approach would allow regulators to continue gathering data on market behaviour while providing enough flexibility for projects to scale up responsibly.
The signatories are willing to work closely with the European Commission to design these safeguards, drawing on the experience gained from the pilot’s first year. In addition to the quantitative arguments, the coalition emphasizes the broader economic benefits of a more permissive tokenisation regime.
Tokenisation can unlock liquidity for traditionally illiquid assets, reduce transaction costs, and enable fractional ownership, thereby democratizing access to investment opportunities for retail investors. It also promises operational efficiencies for issuers, who can automate settlement, custody, and reporting processes through smart contracts. By expanding the cap, the EU could accelerate the rollout of these efficiencies, fostering a more inclusive and dynamic capital market. The response from EU policymakers is expected to be closely watched by the global financial community.
While some regulators have expressed caution—citing concerns about anti‑money‑laundering (AML) compliance, market integrity, and investor protection—the coalition argues that the pilot’s existing supervisory framework already addresses many of these issues. They point to the pilot’s mandatory AML checks, real‑time transaction monitoring, and the requirement for token issuers to maintain a clear audit trail as evidence that the risks are manageable. In summary, the coalition’s appeal to the EU reflects a growing consensus among market participants that the current tokenisation cap is outdated and counterproductive.
By either removing the limit or raising it substantially, the EU would not only align its regulatory environment with global best practices but also stimulate innovation, attract investment, and enhance the competitiveness of European capital markets. The coalition remains committed to collaborating with regulators to ensure that any adjustments are implemented safely, transparently, and in a manner that protects both investors and the broader financial system.