In recent weeks, a coalition of leading financial market operators—including Nasdaq, Boerse Stuttgart, and a host of other exchanges and custodians—has formally appealed to the European Union to either lift the existing ceiling on tokenised assets in the ongoing tokenisation pilot or to increase it substantially. The request stems from growing concerns that the current cap, which limits the total value of assets that can be tokenised under the pilot, is far too restrictive to accommodate the rapid pace of innovation and the scale of projects already underway across Europe. The tokenisation pilot, launched by the European Commission as part of its broader digital finance strategy, is designed to test the feasibility of issuing, trading, and settling tokenised securities on distributed ledger technology (DLT) platforms.
By allowing a limited amount of capital to be represented as digital tokens, the pilot aims to gather data on operational risk, market integrity, investor protection, and regulatory oversight. However, the initial cap—set at a modest €5 billion—has quickly become a point of contention.
Stakeholders participating in the pilot argue that the ceiling does not reflect the true market demand for tokenised assets. Several projects that were already in advanced stages of development before the pilot began have found themselves constrained by the artificial limit.
For example, a cross‑border bond issuance platform being built by a consortium of German and French banks has a projected issuance size of €12 billion, more than double the current cap. Similarly, a green‑energy financing initiative that aims to tokenise renewable‑energy projects across the EU estimates a total tokenised value of €8 billion. Both initiatives have been forced to either scale back their ambitions or postpone launch dates, thereby delaying the benefits that tokenisation could bring to capital markets, such as increased liquidity, broader investor access, and streamlined settlement processes.
In a joint statement, the coalition highlighted three core arguments for raising—or outright removing—the cap. First, the cap hampers the ability of market participants to test the full range of use cases envisioned by the EU’s digital finance agenda. The pilot was meant to be a sandbox where innovators could experiment with large‑scale tokenised offerings, yet the current ceiling forces many projects to remain small‑scale, limiting the robustness of the data collected. Second, the coalition pointed out that the cap creates a competitive disadvantage for European markets relative to other jurisdictions that have adopted more permissive approaches.
The United States, Singapore, and several Asian economies have already opened their regulatory doors to high‑value tokenised securities, attracting issuers and investors seeking a more flexible environment. By keeping the EU’s limit low, the Union risks losing innovative firms to these more welcoming ecosystems, potentially ceding a strategic advantage in the emerging digital asset space.
Third, the coalition argued that the cap undermines investor confidence. When participants know that a project cannot exceed a certain size, they may question the scalability and long‑term viability of the tokenised product.
Moreover, a low cap could lead to fragmented markets, where multiple small tokenised offerings replace a single, more efficient large issuance, increasing operational complexity and cost. In response to these concerns, the coalition proposed two possible pathways for the EU. The first option is to raise the cap to a level that aligns with the projected demand—suggesting a new ceiling of €20 billion, which would accommodate the largest projects currently in the pipeline while still providing a safeguard for regulators to monitor systemic risk. The second, more ambitious option, is to remove the cap entirely for the duration of the pilot, allowing the market to determine the appropriate scale based on real‑world data and risk assessments.
Regulators have welcomed the dialogue, noting that the pilot’s purpose is precisely to gather insights that can inform future policy. The European Securities and Markets Authority (ESMA) has indicated that it will closely monitor the outcomes of any cap adjustment, ensuring that investor protection and market stability remain paramount. Nonetheless, the coalition emphasized that timely action is essential; prolonged uncertainty could stall projects that are already ready to launch, eroding the momentum built around the EU’s digital finance initiatives.
Beyond the immediate practicalities, the debate over the cap touches on broader strategic questions about the role of tokenisation in Europe’s financial future. Proponents see tokenised assets as a gateway to a more inclusive, efficient, and transparent market infrastructure.
By digitising securities, they argue, issuers can tap into a global pool of investors, settlement times can be reduced from days to minutes, and the need for intermediaries can be streamlined, lowering costs for all participants. Critics, however, caution that rapid expansion without adequate oversight could expose the market to new forms of risk, including cyber‑security threats, operational failures in DLT platforms, and challenges related to cross‑border regulatory harmonisation. The coalition acknowledges these risks but contends that they can be mitigated through robust supervisory frameworks, continuous monitoring, and collaboration between regulators and industry.
In summary, Nasdaq, Boerse Stuttgart, and their partners are urging the European Union to reconsider the tokenisation pilot’s financial ceiling. Their appeal is grounded in concrete examples of projects that have already outgrown the current limit, competitive pressures from other global markets, and the desire to foster a vibrant ecosystem that can fully demonstrate the benefits of digital securities. Whether the EU opts to raise the cap to €20 billion, eliminate it altogether, or adopt a phased approach, the decision will have significant implications for the trajectory of tokenised finance in Europe and its ability to compete on the world stage. The coalition has pledged to continue its engagement with EU policymakers, providing detailed data on project sizes, risk assessments, and the potential economic impact of a higher or removed cap.
Their ultimate goal is to ensure that the tokenisation pilot can serve as a genuine testbed for large‑scale innovation, delivering the insights needed to shape a future‑proof regulatory framework that balances ambition with prudence.