In a coordinated effort that underscores the growing significance of digital assets in traditional financial markets, a coalition of prominent exchanges and industry stakeholders—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other European market operators—has formally appealed to the European Union to either remove the existing ceiling on tokenised securities or, at a minimum, raise it to a level that reflects current market realities. The request comes as part of the broader regulatory framework known as the "tokenisation trial," a sandbox‑style initiative launched by the EU to explore the practicalities, benefits, and risks associated with issuing, trading, and settling securities in token form on distributed ledger technology (DLT) platforms. The coalition’s position is grounded in a clear observation: the current cap—set at a modest €1 billion for the aggregate value of tokenised assets that can be issued under the pilot—has become a bottleneck for projects that are already demonstrating robust demand and substantial capital requirements.
Several ongoing European tokenisation projects, ranging from corporate bond issuances to real‑estate investment tokens, have already exceeded the stipulated limit, forcing issuers to either fragment their offerings or abandon the tokenised route altogether. By keeping the ceiling artificially low, the EU risks stifling innovation, discouraging investment, and ceding competitive advantage to jurisdictions outside Europe that have adopted more flexible approaches. Nasdaq, as one of the world’s leading operators of equity markets, highlighted that its own exploratory tokenisation initiatives have quickly outgrown the €1 billion threshold. In a statement, Nasdaq’s European head of market infrastructure noted that the firm has been working with a consortium of issuers to develop a token‑based platform for mid‑size corporate bonds, a segment that routinely involves issuance sizes well above the current cap.
"Our pilots have shown that tokenisation can dramatically improve settlement times, reduce custody costs, and increase market transparency," the spokesperson said. "However, the existing limit prevents us from scaling these pilots to a size that would generate meaningful data for regulators and market participants alike." Similarly, Börse Stuttgart, which has positioned itself as a pioneer in the European token market through its "digital securities" platform, echoed Nasdaq’s concerns.
The Stuttgart exchange has already facilitated the issuance of tokenised shares for several German mid‑cap companies, with total outstanding tokenised equity approaching €1.3 billion. The exchange argued that the cap not only hampers the ability to meet investor demand but also creates an uneven playing field, as some issuers are forced to seek alternative, less regulated venues outside the EU to complete larger offerings. Beyond the major exchanges, a broader coalition of fintech firms, asset managers, and blockchain service providers signed a joint letter to the European Commission and the European Securities and Markets Authority (ESMA). The letter outlined three core arguments for revising the cap: 1.
**Market Evidence of Demand**: Empirical data from the pilot’s first phase shows that investors are eager to allocate capital to tokenised securities, with subscription rates consistently exceeding 80 % of the offered amount. This appetite is especially strong among institutional investors seeking efficient collateral and faster settlement cycles. 2. **Economic Efficiency Gains**: Tokenisation reduces the need for multiple intermediaries, cuts settlement times from days to minutes, and lowers operational costs.
By restricting the scale of tokenised issuances, the EU forfeits potential savings that could be passed on to both issuers and investors. 3. **Regulatory Insight and Data Collection**: Larger, more representative tokenised offerings would provide regulators with richer data sets to assess systemic risk, market integrity, and investor protection issues. A higher cap would therefore enhance, rather than diminish, the EU’s ability to supervise the emerging market.
The coalition also warned that the current cap could inadvertently push innovators toward jurisdictions with more permissive regimes, such as the United States, Singapore, or certain offshore financial centres. This regulatory arbitrage would dilute the EU’s influence over the development of global token standards and could lead to fragmented market practices that undermine cross‑border trading.
In response, EU officials have acknowledged the concerns but emphasized the need for a cautious, evidence‑based approach. A senior official at ESMA noted that the tokenisation trial is deliberately designed as a controlled environment to monitor risks such as market fragmentation, liquidity shortfalls, and cybersecurity threats.
"We are open to reviewing the cap as we gather more data," the official said, "but any adjustment must be proportionate to the demonstrated benefits and aligned with our broader objectives for market stability and investor protection." The debate is taking place against a backdrop of rapid technological advancement and shifting investor expectations. Tokenisation, which involves representing a traditional security—such as a share, bond, or real‑estate interest—as a digital token on a blockchain, promises to democratise access to capital markets, enable fractional ownership, and provide near‑real‑time settlement. Yet, the technology also raises novel challenges, including the need for robust custody solutions, clear legal frameworks for token ownership, and mechanisms to handle corporate actions on a distributed ledger. Looking ahead, the coalition has proposed a phased approach to revising the cap.
In the short term, they suggest raising the ceiling to €5 billion, a level that would accommodate the majority of current projects while still allowing regulators to monitor the market closely. In the longer term, they advocate for a dynamic cap that could be adjusted annually based on predefined metrics such as total tokenised issuance volume, market liquidity indicators, and the maturity of DLT infrastructure across the EU. The outcome of this dialogue will likely shape the trajectory of digital securities in Europe for years to come.
If the EU decides to lift or substantially increase the cap, it could cement the region’s status as a leader in the tokenised securities space, attract a wave of fintech investment, and accelerate the integration of blockchain technology into mainstream finance. Conversely, maintaining a restrictive ceiling could slow adoption, push innovators abroad, and leave Europe trailing behind more progressive markets. In summary, Nasdaq, Börse Stuttgart, and a host of other market participants are urging the European Union to reconsider the €1 billion limit imposed on tokenised asset issuances under the tokenisation trial. Their argument rests on concrete market data, demonstrated efficiency gains, and the strategic importance of fostering a vibrant, regulated digital securities ecosystem.
The EU’s forthcoming decision will be closely watched by global stakeholders eager to see whether Europe will lead or lag in the next wave of financial innovation.