In recent weeks, a coalition of major financial market participants, including Nasdaq, the Börse Stuttgart, and a number of other prominent exchanges and token‑service providers, has formally appealed to European regulators to either eliminate the existing ceiling on tokenised assets or to raise it substantially. The request stems from growing concerns that the current cap—set at a modest €100 million for projects participating in the European Union’s tokenisation pilot—creates a bottleneck that could stifle innovation, limit the scale of emerging digital‑asset offerings, and ultimately place Europe at a competitive disadvantage compared to other jurisdictions that have adopted more flexible frameworks. The coalition’s position paper, submitted to the European Commission and the European Securities and Markets Authority (ESMA), outlines several key arguments.
First, it points out that the tokenisation pilot, launched under the EU’s Markets in Crypto‑Assets (MiCA) regulatory package, was intended to serve as a sandbox for testing the issuance, trading, and settlement of tokenised securities, commodities and other assets. By imposing a hard limit on the total value of assets that can be tokenised within the sandbox, the regulators inadvertently curtail the very experimentation the pilot was meant to encourage. The coalition notes that many of the projects already approved for participation have quickly approached, and in some cases exceeded, the €100 million threshold, demonstrating that market demand far outstrips the current allowance.
Second, the coalition argues that the cap undermines the economies of scale that are essential for the viability of tokenised markets. Tokenisation, by design, reduces friction, lowers transaction costs, and enhances liquidity through fractional ownership and programmable features. However, these benefits become pronounced only when a sufficient volume of assets is on‑chain. A low ceiling forces issuers to fragment their offerings or to limit the number of participants, which in turn reduces liquidity and hampers price discovery.
The coalition cites examples from pilot participants who have had to restructure their issuance strategies—splitting a single €200 million real‑estate fund into multiple smaller tokens—to stay within the regulatory limit, a process that adds administrative overhead and confuses investors. Third, the appeal highlights the risk of regulatory arbitrage.
While the EU seeks to position itself as a leader in responsible crypto‑asset regulation, the restrictive cap may drive innovators to seek friendlier environments in jurisdictions such as the United States, Singapore, or Switzerland, where token‑issuance thresholds are either higher or non‑existent. This could result in a talent drain, loss of investment, and missed opportunities for European fintech firms to develop cutting‑edge infrastructure. The coalition warns that Europe’s ambition to become a hub for digital finance could be compromised if the regulatory framework does not evolve in step with market realities.
In response, the coalition proposes two possible pathways for the European Commission: 1. **Removal of the Cap** – Eliminate the €100 million ceiling altogether, allowing tokenisation projects to scale organically based on market demand and risk assessments conducted by competent authorities. This approach would align the pilot with the broader MiCA objectives of fostering innovation while maintaining investor protection through robust supervisory mechanisms.
2. **Substantial Increase of the Cap** – If a complete removal is deemed premature, the coalition recommends raising the limit to at least €500 million, with a built‑in review mechanism that can adjust the threshold as the market matures.
This middle‑ground solution would provide immediate relief to current participants while preserving regulatory oversight. The coalition also suggests that any future adjustments be accompanied by clear guidance on compliance obligations, reporting standards, and risk‑mitigation measures. By doing so, the EU can ensure that larger tokenisation projects maintain transparency, adhere to anti‑money‑laundering (AML) requirements, and protect retail investors from undue exposure. Stakeholders across the European financial ecosystem have voiced support for the coalition’s recommendations.
Asset managers see tokenisation as a pathway to unlock illiquid assets such as private equity, infrastructure and real‑estate, thereby broadening investment opportunities for a wider investor base. Meanwhile, technology firms argue that a higher cap would justify the substantial upfront investment required to build secure, interoperable token‑infrastructure, including distributed ledger technology, smart‑contract auditing tools, and custodial solutions. Critics of the cap‑increase proposal caution that a sudden influx of high‑value tokenised assets could strain existing supervisory capacities.
They argue for a phased approach, where regulators monitor market developments, assess systemic risk, and incrementally adjust the ceiling. Nonetheless, most commentators agree that the current limit is out of step with the rapid pace of digital‑asset innovation and that a recalibration is necessary to keep Europe competitive. The European Commission is expected to review the coalition’s submission during its upcoming consultation on the MiCA framework, scheduled for the fourth quarter of this year.
If the regulators adopt the suggested changes, the tokenisation pilot could see a surge in participation, with larger funds, cross‑border securities, and even tokenised debt instruments entering the sandbox. Such an expansion would not only provide valuable data on the operational and legal challenges of large‑scale tokenisation but also generate insights that could shape the final form of EU-wide token‑asset regulation.
In conclusion, the appeal from Nasdaq, Börse Stuttgart and their allies underscores a pivotal moment for the EU’s digital‑finance agenda. By either removing or substantially raising the tokenisation cap, the Union has the opportunity to demonstrate a forward‑looking regulatory stance that balances innovation with investor protection. The decision will likely influence the trajectory of tokenised markets across Europe, determining whether the region becomes a leading hub for the next generation of financial products or remains constrained by outdated limits.