Nasdaq, Stuttgart Stock Exchange and Others Urge EU to Lift or Raise Cap in Tokenisation Pilot

In a coordinated effort that underscores the growing momentum behind digital asset innovation, a coalition of major market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a host of other financial institutions—has formally appealed to European Union regulators to either remove the existing ceiling on tokenised assets or substantially increase it within the framework of the EU’s ongoing tokenisation pilot programme. The coalition’s joint statement, released earlier this week, argues that the current cap on the total value of assets that can be tokenised under the pilot is far too restrictive to accommodate the rapid development of blockchain‑based financial products and to reflect the true potential of tokenisation as a transformative technology for capital markets. The tokenisation pilot, launched by the European Commission as part of its broader Digital Finance Strategy, aims to test the feasibility, safety, and regulatory compatibility of issuing and trading tokenised securities on distributed ledger technology (DLT) platforms. Under the pilot’s original parameters, participants were limited to a maximum aggregate value of €2 billion for tokenised securities, a figure that the coalition contends was set without sufficient consultation with market operators and does not reflect the scale of existing projects already underway across the continent.

In its appeal, the coalition highlights several concrete examples of European initiatives that have already breached the €2 billion threshold. Notably, a consortium of German banks and fintech firms has successfully tokenised a portfolio of corporate bonds valued at approximately €3.5 billion, while a cross‑border venture involving French and Dutch asset managers has launched a tokenised real‑estate fund exceeding €4 billion in underlying assets. These cases, the coalition argues, demonstrate that the market’s appetite for tokenised securities far outstrips the pilot’s current limits and that maintaining such a low ceiling could stifle innovation, deter investment, and place Europe at a competitive disadvantage relative to other jurisdictions that have adopted more flexible approaches. Beyond the immediate financial implications, the coalition emphasizes the broader strategic importance of tokenisation for the EU’s ambition to become a global leader in digital finance.

Tokenised assets promise numerous benefits, including increased liquidity, fractional ownership, faster settlement cycles, and enhanced transparency through immutable ledger records. By lowering barriers to entry for smaller investors and enabling seamless cross‑border transactions, tokenisation can deepen market participation and support the EU’s goals of financial inclusion and sustainable growth. The coalition’s request is grounded in several key arguments: 1.

**Market Realities**: The existing €2 billion cap does not align with the scale of tokenised projects already in operation. Several pilots and live issuances across Europe have already exceeded this limit, indicating that the cap is no longer a realistic constraint. 2. **Regulatory Consistency**: A higher or removed cap would bring the EU’s tokenisation framework into closer alignment with other leading jurisdictions, such as the United States and Singapore, where regulators have adopted more permissive thresholds, thereby fostering a level playing field for global participants.

3. **Innovation Incentives**: Removing or raising the ceiling would provide a clearer signal to innovators, investors, and technology providers that the EU is committed to supporting the development of DLT‑based securities, encouraging further research, development, and capital deployment. 4. **Economic Benefits**: By facilitating larger tokenised offerings, the EU can attract more capital, stimulate secondary market activity, and generate ancillary services—such as custody, compliance, and analytics—creating jobs and tax revenue.

5. **Risk Management**: The coalition asserts that a higher cap does not inherently increase systemic risk, provided that robust supervisory mechanisms, clear AML/CFT standards, and investor protection rules remain in place. In fact, a larger pool of tokenised assets could enhance risk diversification across the market. In response to the coalition’s letter, the European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) has indicated that it will review the request as part of its ongoing assessment of the pilot’s progress.

Officials have stressed the importance of balancing innovation with prudential safeguards, noting that any adjustment to the cap would be accompanied by a thorough impact analysis and stakeholder consultation. Industry observers note that the timing of the coalition’s appeal coincides with a broader wave of legislative activity in the EU, including the upcoming Markets in Crypto‑Assets (MiCA) regulation, which seeks to establish a comprehensive regulatory framework for crypto‑assets and related services. The outcome of the tokenisation cap discussion could have significant implications for how MiCA is implemented, particularly regarding the classification of tokenised securities and the scope of permissible activities for market participants. Looking ahead, the coalition has outlined a roadmap for the next phase of tokenisation development, should the cap be lifted or increased.

This roadmap includes: - **Scaling Existing Projects**: Expanding current tokenised bond and fund offerings to fully utilise the higher limit, thereby demonstrating the practical benefits of larger tokenised pools. - **Launching New Asset Classes**: Introducing tokenised versions of traditionally illiquid assets, such as infrastructure projects, private equity stakes, and renewable energy certificates, to broaden market depth.

- **Enhancing Infrastructure**: Investing in interoperable DLT platforms, standardized token protocols, and shared services for custody and settlement to ensure seamless operation across borders. - **Strengthening Supervision**: Collaborating with national regulators to develop real‑time monitoring tools, stress‑testing frameworks, and clear reporting requirements tailored to tokenised assets. The coalition’s call to action reflects a decisive moment for the EU’s digital finance agenda.

By reconsidering the tokenisation cap, policymakers have the opportunity to unlock significant economic potential, position Europe as a hub for cutting‑edge financial technology, and deliver tangible benefits to investors and issuers alike. As the dialogue continues, stakeholders across the financial ecosystem will be watching closely to see whether the EU will adapt its regulatory stance to accommodate the accelerating pace of tokenisation innovation.