In recent weeks, a coalition of leading financial institutions and market operators—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a number of other prominent European participants—has formally appealed to European Union regulators to either eliminate or significantly increase the ceiling that governs the amount of assets that can be placed into tokenised form under the EU’s pilot programme for distributed ledger technology (DLT) in securities markets. The request stems from growing concerns that the current cap, which limits the total value of assets that may be tokenised within the experimental framework, is too restrictive to accommodate the scale and ambition of several ongoing projects across the continent. According to the coalition’s joint statement, a number of initiatives that have already been launched or are in advanced stages of development already exceed the existing threshold, rendering the cap a practical obstacle rather than a protective safeguard. Tokenisation, the process of converting traditional financial assets—such as equities, bonds, or real‑estate holdings—into digital tokens that can be recorded, transferred, and settled on a blockchain or other distributed ledger, promises a host of benefits.
These include faster settlement times, reduced counter‑party risk, enhanced transparency, and the potential for fractional ownership that can broaden investor access. The EU’s pilot, launched under the umbrella of the European Commission’s Digital Finance Strategy, was designed to test these advantages in a controlled environment while gathering data on operational, legal, and regulatory implications.
However, the pilot’s original design imposed a monetary ceiling—initially set at €1 billion—to limit the aggregate value of assets that could be tokenised during the trial period. This figure was intended to mitigate systemic risk while the technology was still being evaluated.
As the market’s enthusiasm for DLT solutions grew, participants quickly discovered that the cap was out of step with the scale of real‑world transactions they wished to process. Nasdaq, a global leader in exchange services and market technology, highlighted that several of its European partners are already operating tokenisation pilots that involve multi‑billion‑euro portfolios of corporate bonds and equity securities. Similarly, the Stuttgart Stock Exchange, which has been a pioneer in integrating blockchain‑based settlement for small‑cap stocks, reported that its own token‑based trading platform routinely processes transaction volumes well beyond the current limit.
The coalition’s statement cites concrete examples: a cross‑border tokenised bond issuance valued at €2.5 billion, a token‑driven secondary market for small‑cap equities handling €1.8 billion in daily turnover, and a real‑estate tokenisation scheme that has already locked in €3 billion of underlying asset value. Beyond the raw numbers, the coalition argues that the cap hampers innovation by creating a disincentive for larger issuers to experiment with tokenisation. Many institutional investors and corporate issuers remain hesitant to allocate capital to a framework that could abruptly halt their projects if the aggregate tokenised value approaches the ceiling.
This uncertainty, the coalition notes, undermines the very purpose of the pilot, which is to gather robust, real‑world data on how tokenised securities behave under market stress, how custody solutions perform, and how investor protection mechanisms can be adapted. From a regulatory perspective, the coalition acknowledges the EU’s legitimate interest in managing systemic risk, especially given the nascent state of DLT infrastructure.
Nonetheless, it proposes a calibrated approach: either remove the cap entirely for the duration of the pilot, allowing market participants to self‑regulate within the broader supervisory framework, or replace the fixed monetary limit with a dynamic, risk‑based metric that can be adjusted in line with market growth and the maturity of operational safeguards. In support of its position, the coalition points to data from other jurisdictions where tokenisation pilots have operated without a hard ceiling. For instance, the United States’ Securities and Exchange Commission’s (SEC) sandbox for blockchain‑based securities has allowed participants to tokenise assets worth several billions of dollars, with oversight provided through continuous reporting and real‑time monitoring tools.
Similarly, Singapore’s Monetary Authority has adopted a flexible cap model that scales with the aggregate risk exposure of participating firms, thereby balancing innovation with prudential oversight. The coalition also emphasizes that a higher—or eliminated—cap would enable more comprehensive testing of critical components such as cross‑border settlement, liquidity provision, and the integration of tokenised assets into existing custodial and clearing systems. By expanding the volume of assets under tokenised management, regulators would obtain richer data on how market participants respond to price discovery in a token environment, how volatility is transmitted across linked markets, and how legal ownership is enforced when tokens are transferred across multiple jurisdictions. Furthermore, the coalition suggests that an increased cap could accelerate the development of ancillary services, such as token‑based lending, collateral management, and decentralized finance (DeFi) interfaces that rely on a deep pool of tokenised securities to function effectively.
These services, while still experimental, hold the promise of unlocking new sources of liquidity for both issuers and investors, particularly in sectors that have historically suffered from illiquidity, such as private equity, infrastructure, and certain segments of the real‑estate market. In response to the coalition’s appeal, the European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) has indicated that it will review the cap as part of its ongoing assessment of the pilot’s progress. Officials have signalled a willingness to consider adjustments, provided that any change is accompanied by enhanced reporting requirements, robust risk‑management protocols, and clear guidelines on how participants must notify regulators of significant increases in tokenised asset volumes.
The debate over the cap is likely to continue throughout the remainder of the pilot, which is slated to run until the end of 2025. Stakeholders on both sides agree that the ultimate goal is to create a regulatory environment that fosters innovation while safeguarding market integrity. Whether the EU will choose to lift the ceiling entirely, adopt a tiered system, or retain a modest cap with periodic reviews remains to be seen.
What is clear, however, is that the coalition’s request underscores a broader shift in the European financial landscape: a move toward embracing blockchain‑based solutions at a scale that reflects the true potential of tokenisation to transform capital markets.