In recent weeks, a coalition of leading financial market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other prominent institutions—has formally appealed to the European Union to either remove the existing ceiling 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 total value of assets that can be tokenised under the pilot, is far too restrictive to accommodate the scale and ambition of several high‑profile projects already underway across the continent.
The tokenisation pilot, launched by the European Commission as part of its broader digital finance strategy, is designed to test the feasibility, safety, and regulatory compatibility of issuing digital representations of real‑world assets on distributed ledger technology (DLT). By allowing participants to experiment with tokenised securities, commodities, and other asset classes, the pilot aims to lay the groundwork for a more efficient, transparent, and inclusive financial market infrastructure.
However, a key parameter of the pilot is the aggregate monetary cap placed on the total value of tokenised assets that participants may issue during the testing phase. This cap was originally set at a modest level to mitigate systemic risk while regulators gathered data on the new technology. As the pilot progressed, several projects quickly approached, and in some cases exceeded, the prescribed threshold. Notably, a consortium of German and French banks is developing a tokenised bond issuance platform that aims to raise several hundred million euros to fund sustainable infrastructure projects.
Simultaneously, a pan‑European fintech consortium is piloting a tokenised real‑estate fund that seeks to democratise access to property investment by allowing fractional ownership through blockchain‑based tokens. Both initiatives, along with others focusing on tokenised equity, carbon credits, and even art, have signalled that the current cap is acting as a bottleneck, limiting the ability of innovators to fully demonstrate the benefits of tokenisation at scale. In its joint statement, the coalition highlighted several specific concerns. First, the cap hampers the ability to achieve meaningful liquidity.
Tokenised assets are most valuable when they can be traded in sufficient volume to attract a broad base of investors. A low ceiling forces participants to keep the size of each issuance artificially small, which in turn reduces market depth and discourages the participation of institutional investors who typically require larger exposures. Second, the cap undermines the pilot’s objective of testing a wide variety of asset classes and use cases. By restricting the total value, regulators receive a skewed data set that may not accurately reflect the risks and operational challenges associated with large‑scale tokenisation.
The coalition also argued that the cap creates an uneven playing field. Smaller firms and start‑ups, which may lack the capital to operate within the limited window, risk being sidelined, while larger, well‑capitalised institutions can more easily absorb the restrictions. This could stifle competition and innovation, contrary to the EU’s stated goal of fostering a vibrant digital finance ecosystem that benefits both incumbents and newcomers.
To address these issues, the signatories proposed two possible pathways for the EU. The first is a complete removal of the monetary cap, allowing participants to tokenise assets without a predefined upper limit, subject only to existing prudential safeguards and ongoing supervisory oversight. The second option is to raise the cap to a level that reflects the realistic scale of the projects currently in development—suggesting a figure in the range of several billions of euros, rather than the current sub‑billion limit.
Either approach, they contend, would enable a more accurate assessment of tokenisation’s impact on market efficiency, risk management, and investor protection. Regulators have responded with cautious openness. The European Securities and Markets Authority (ESMA) acknowledged the coalition’s points, noting that the pilot is intended to be a learning exercise and that adjustments may be warranted as more data becomes available.
ESMA emphasized that any change to the cap would be accompanied by a thorough risk‑assessment process, ensuring that the benefits of expanded tokenisation do not come at the expense of financial stability. Beyond the immediate regulatory considerations, the coalition’s request underscores broader strategic trends in the European financial landscape. Tokenisation is increasingly viewed as a cornerstone of the EU’s ambition to become a global leader in sustainable finance and digital innovation. By enabling fractional ownership, faster settlement, and programmable compliance features, tokenised assets can lower entry barriers for retail investors, accelerate capital formation for green projects, and streamline cross‑border transactions.
Moreover, the push to raise the cap aligns with parallel developments in other jurisdictions. In the United States, the Securities and Exchange Commission (SEC) has been gradually clarifying its stance on digital securities, while Singapore and Switzerland have already established more permissive frameworks that encourage large‑scale tokenisation pilots. European market participants argue that maintaining a restrictive cap could place the EU at a competitive disadvantage, potentially driving innovators to relocate to more accommodating environments.
In summary, the coalition led by Nasdaq, Börse Stuttgart, and other key market actors is urging the European Union to reconsider the monetary ceiling imposed on its tokenisation pilot. Their argument rests on the need for sufficient scale to generate meaningful liquidity, to capture a comprehensive risk profile, and to foster an inclusive ecosystem that supports both large institutions and emerging firms. While regulators remain vigilant about systemic risk, there is a growing consensus that a calibrated increase—or outright removal—of the cap could unlock the full potential of tokenised finance, positioning Europe at the forefront of the next wave of financial market transformation.