In recent weeks, a coalition of leading financial market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other prominent exchanges and fintech firms—has formally appealed to European Union regulators to either eliminate the current ceiling on tokenised assets or at least raise it to a more realistic level. This request stems from growing concerns that the existing limit, which was introduced as part of a pilot programme designed to test the feasibility and safety of tokenisation within the EU’s financial framework, is now acting as a bottleneck that could stifle innovation and prevent Europe from keeping pace with global developments in digital finance.
The tokenisation pilot, launched by the European Commission in 2022, was intended to provide a controlled environment where market participants could experiment with issuing, trading, and settling tokenised securities, commodities, and other assets on distributed ledger technology (DLT) platforms. The pilot set a maximum aggregate value of €100 million for tokenised projects, a figure that was originally chosen as a cautious starting point to allow regulators to monitor risk exposure while still giving innovators room to demonstrate the benefits of blockchain‑based settlement.
However, as the pilot has progressed, the coalition of market players has gathered substantial evidence that the €100 million ceiling is now far too restrictive. Several ongoing projects across the continent already exceed this threshold, and the limit is forcing participants to either split their offerings into multiple smaller tokens—thereby increasing complexity and operational costs—or to abandon promising initiatives altogether. In a joint statement released on Monday, the coalition highlighted three core arguments for raising or removing the cap: 1. **Market Maturity and Demand**: Over the past two years, the tokenisation ecosystem in Europe has matured significantly.
Institutional investors, asset managers, and corporate issuers have expressed a strong appetite for larger‑scale tokenised offerings that can match the size of traditional securities markets. The current cap prevents the creation of tokenised bonds, real‑estate funds, or infrastructure projects that would typically involve hundreds of millions of euros, limiting the pilot’s relevance to real‑world financing needs. 2. **Competitive Disadvantage**: Outside the EU, jurisdictions such as the United States, Singapore, and the United Arab Emirates have already adopted more flexible regulatory approaches, allowing tokenised assets with substantially higher values.
This has attracted capital and talent away from Europe, potentially leaving the continent behind in the race to become a hub for digital asset innovation. By keeping the cap low, the EU risks losing its competitive edge and missing out on the economic benefits associated with large‑scale tokenised finance.
3. **Risk Management Through Proven Technology**: The coalition argues that the original rationale for a low ceiling—risk mitigation—can now be addressed through more sophisticated risk‑management tools and supervisory mechanisms. Advances in smart‑contract auditing, real‑time monitoring of DLT networks, and robust KYC/AML procedures provide regulators with the ability to oversee larger tokenised transactions without exposing the market to undue systemic risk.
In addition to these points, the coalition provided concrete examples of projects that have been directly impacted by the cap. One such initiative involves a pan‑European renewable‑energy fund that aims to raise €250 million through tokenised equity. Under the current rules, the fund would have to issue multiple token series, each capped at €100 million, complicating the investor onboarding process and increasing legal and compliance overhead.
Another case concerns a large‑scale real‑estate development in Berlin, where the developer sought to issue tokenised debt securities worth €180 million to diversify funding sources; the cap forced the developer to seek traditional bank financing instead, negating the benefits of blockchain‑based efficiency and transparency. The coalition’s appeal is not merely a request for deregulation; it is accompanied by a set of recommendations designed to ensure that any increase in the cap is accompanied by appropriate safeguards. These include: - **Tiered Cap Structure**: Introducing a graduated cap system where projects with proven compliance histories and robust risk‑management frameworks can access higher limits, while newer entrants remain subject to the original ceiling until they demonstrate reliability. - **Enhanced Reporting Requirements**: Mandating detailed periodic disclosures to regulators about tokenised asset performance, custody arrangements, and smart‑contract audits to maintain transparency and allow for early detection of potential issues.
- **Regulatory Sandbox Extension**: Expanding the existing sandbox environment to accommodate larger tokenised offerings, providing a controlled space for testing while still under regulatory oversight. The European Commission has responded positively to the coalition’s concerns, indicating that it will review the pilot’s parameters as part of its broader Digital Finance Strategy.
A spokesperson for the Commission noted that the EU is committed to fostering innovation while safeguarding market stability, and that the feedback from market participants will be a key factor in shaping any amendments to the tokenisation framework. If the EU decides to raise or remove the cap, the implications could be far‑reaching.
Larger tokenised projects would unlock new sources of liquidity for issuers, reduce reliance on traditional intermediaries, and potentially lower transaction costs for investors. Moreover, a more permissive environment could stimulate the development of ancillary services, such as token custody solutions, DLT infrastructure providers, and specialized legal advisory firms, further strengthening Europe’s digital finance ecosystem.
Conversely, regulators will need to remain vigilant. Expanding the scale of tokenised assets introduces new challenges related to market integrity, investor protection, and cross‑border coordination.
The coalition acknowledges these concerns and has pledged to work closely with supervisory authorities to develop best‑practice standards that balance innovation with prudential oversight. In summary, the joint request from Nasdaq, Börse Stuttgart, and their partners underscores a pivotal moment for the EU’s tokenisation experiment. By reconsidering the current €100 million ceiling—either by raising it to a level that reflects market realities or by removing it entirely—the Union has the opportunity to position itself at the forefront of the digital asset revolution, attract significant capital flows, and demonstrate that a well‑regulated tokenised market can coexist with traditional financial systems.
The coming weeks will reveal whether policymakers embrace this vision and adjust the regulatory framework accordingly, potentially reshaping the future of finance across Europe.