In recent weeks, a coalition of major financial institutions and market operators—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a range of other European stakeholders—has formally appealed to the European Union to either remove the existing ceiling on tokenised assets or to raise it substantially. Their request is directed at the EU’s pilot programme on the tokenisation of securities, a regulatory sandbox designed to test how blockchain‑based representations of traditional financial instruments can be integrated into the broader market infrastructure.
The coalition argues that the current cap, which limits the total value of tokenised assets that can be issued under the pilot, is far too restrictive for the ambitions of the participating projects and for the overall development of a competitive digital securities market in Europe. The tokenisation pilot, launched by the European Commission in 2022, was intended as a stepping‑stone toward a more modern, efficient, and transparent financial ecosystem.
By allowing a limited amount of assets to be issued as digital tokens on distributed ledger technology (DLT) platforms, the programme aims to gather data on operational, legal, and supervisory challenges, and to inform future legislation. However, the coalition points out that the original ceiling—set at a modest €1 billion—has already been reached by several early adopters, and in some cases, the projects have been forced to scale back or postpone their roll‑outs because they could not exceed the imposed limit. Nasdaq, a global exchange operator with a long history of pioneering market infrastructure, highlighted that its European tokenisation initiatives, which involve the issuance of tokenised bonds and equities for institutional investors, have quickly outgrown the cap. In a statement, Nasdaq’s European head explained that the firm has already earmarked more than €1.5 billion in tokenised securities that are ready for issuance, but the current ceiling prevents the full deployment of these products.
"Our clients are demanding faster, more cost‑effective settlement solutions that blockchain can provide," the spokesperson said. "The cap not only hampers our ability to meet that demand, it also sends a signal that Europe is not fully committed to fostering innovation in the capital markets space." The Stuttgart Stock Exchange, which has been a vocal advocate for digital asset trading in Germany, echoed similar concerns.
Börse Stuttgart has been developing a platform for tokenised shares and exchange‑traded funds (ETFs) that leverages DLT to offer 24/7 trading and near‑instant settlement. According to its chief technology officer, the exchange has already secured commitments from several German and Austrian banks to issue tokenised securities worth well over €2 billion. Yet, under the current pilot rules, only a fraction of that volume can be legally tokenised and listed. "We are at a crossroads," the CTO remarked.
"Either the EU lifts the cap, allowing us to fully operationalise our platform, or we risk losing the momentum we have built with our partners and investors." Beyond Nasdaq and Stuttgart, a broader coalition of banks, fintech firms, and industry associations has signed a joint letter to the European Commission and the European Securities and Markets Authority (ESMA). The letter outlines three core arguments for raising or removing the cap: 1. **Market Demand and Competitive Pressure**: European issuers and investors are increasingly turning to tokenised solutions to reduce settlement times, cut custody costs, and improve transparency. Competing jurisdictions, such as the United States and Singapore, have already introduced more flexible frameworks that allow far larger volumes of tokenised assets.
If Europe maintains a low ceiling, it risks losing both talent and capital to these more progressive markets. 2. **Evidence from Ongoing Projects**: Several pilot participants have already demonstrated that tokenisation can be safely and efficiently managed at scales well beyond the current limit. For example, a cross‑border bond issuance involving a consortium of Nordic banks successfully tokenised €800 million of debt, with settlement completed in under two hours.
The project’s risk assessments and audit trails satisfied both national regulators and the European Central Bank, proving that the technology can handle larger volumes without compromising stability. 3. **Regulatory Clarity and Long‑Term Growth**: A higher or removed cap would provide clearer signals to market participants about the EU’s long‑term commitment to digital finance. It would also enable a more robust data set for regulators to analyse, thereby facilitating the creation of a comprehensive, proportionate regulatory framework that balances innovation with investor protection.
In response to the coalition’s appeal, a spokesperson for the European Commission acknowledged the concerns but emphasized the need for a measured approach. "The pilot was designed to be a controlled environment where we can learn about the operational and supervisory implications of tokenisation," the official said. "We are closely monitoring the uptake and will review the cap in light of the evidence gathered. Our priority is to ensure market stability while fostering innovation." ESMA, tasked with overseeing the pilot’s implementation, has also indicated that it will conduct a formal review of the cap before the pilot’s scheduled conclusion in 2025.
The authority plans to consult with market participants, consumer groups, and national regulators to assess whether the current limit aligns with the objectives of the Digital Finance Strategy and the EU’s broader ambition to become a global leader in fintech. While the regulatory bodies deliberate, many participants in the pilot are already preparing contingency plans.
Some issuers are exploring alternative jurisdictions for larger tokenised offerings, while others are considering hybrid models that combine traditional securities with tokenised components to stay within the cap. Nonetheless, the consensus among the coalition is clear: a higher ceiling—or ideally, its removal—would unlock significant economic benefits, ranging from increased liquidity for SMEs seeking capital to more efficient cross‑border funding flows. The debate over the cap also touches on broader policy themes, such as the EU’s Green Deal and its focus on sustainable finance. Tokenisation can facilitate the issuance of green bonds and other ESG‑linked instruments by providing transparent, immutable records of how proceeds are used.
A higher cap would therefore support the EU’s climate objectives by making it easier for issuers to raise funds for environmentally friendly projects. In summary, Nasdaq, the Stuttgart Stock Exchange, and a growing alliance of financial actors are urging the European Union to reconsider the restrictive ceiling imposed on its tokenisation pilot. They argue that the cap is already being exceeded in practice, that it hampers competitiveness, and that lifting it would provide valuable data for shaping future regulation.
As the EU weighs the benefits of a more open approach against the need for prudential oversight, the outcome of this discussion will likely shape the trajectory of digital securities in Europe for years to come.