In a coordinated effort that underscores the growing importance of digital assets in traditional finance, a coalition of leading market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and several other prominent exchanges and fintech firms—has formally appealed to the European Union to either remove the current ceiling on tokenised securities or substantially raise it within the framework of the EU’s ongoing tokenisation trial. The coalition’s position is grounded in a detailed analysis of the pilot’s operational realities and the broader trajectory of tokenisation across Europe, which together suggest that the present limit is not only restrictive but also misaligned with the market’s evolving needs. The tokenisation trial, launched by the European Commission as part of its broader Digital Finance Strategy, aims to test the feasibility of issuing, trading, and settling securities in a digital format using distributed ledger technology (DLT). Central to this experiment is a cap that restricts the total value of tokenised assets that can be issued under the pilot’s umbrella.
While the cap was initially intended to provide a controlled environment for regulators and participants to assess risks, the coalition argues that the threshold is now outdated. According to their assessment, several ongoing projects—such as cross‑border bond issuances, tokenised equity offerings, and real‑estate asset tokenisation schemes—have already reached or exceeded the current limit, forcing participants to either halt further issuance or seek alternative, less efficient pathways.
In its formal submission to the European Commission, the coalition highlighted three core arguments. First, the cap hampers market liquidity.
By artificially limiting the volume of tokenised securities, the pilot constrains the depth of order books, reduces the diversity of participants, and ultimately diminishes the price discovery mechanisms that are essential for a vibrant secondary market. Second, the restriction curtails innovation. Start‑ups and established financial institutions alike are investing heavily in DLT‑based platforms, and a low ceiling discourages them from scaling their solutions, potentially driving talent and capital to jurisdictions with more permissive regulatory frameworks. Third, the coalition points to competitive disadvantages.
Other global financial centres—such as New York, Singapore, and Dubai—have already adopted more flexible approaches to tokenised assets, positioning themselves as attractive hubs for issuers seeking to leverage the efficiency gains of blockchain technology. To illustrate the practical impact of the cap, the coalition provided case studies from three distinct projects. The first involves a €250 million tokenised green bond issued by a consortium of European municipalities seeking to finance sustainable infrastructure.
Under the current limit, the bond could only be partially tokenised, requiring a hybrid structure that combines traditional paper securities with a digital component. This not only raises compliance costs but also fragments the investor base. The second case details a tokenised share offering by a mid‑size technology firm that aimed to raise €150 million to fund its expansion into the Asian market.
The cap forced the firm to cap the tokenised portion at €50 million, thereby limiting the exposure of crypto‑savvy investors and reducing the overall fundraising efficiency. The third example concerns a tokenised real‑estate fund that aggregates property assets across several EU countries. The fund’s managers reported that the cap prevented them from fully tokenising the portfolio, which in turn limited the fund’s ability to offer fractional ownership and liquidity to retail investors. Beyond these concrete examples, the coalition emphasised the broader economic benefits that a higher or removed cap could unlock.
Tokenisation promises faster settlement times—potentially moving from the current T+2 or T+3 cycles to near‑real‑time settlement—thereby reducing counter‑party risk and operational costs. It also enables fractional ownership, opening up investment opportunities to a wider demographic, including retail investors who might otherwise be excluded from high‑value assets such as commercial real estate or large‑cap equities.
Moreover, the transparency inherent in blockchain ledgers can improve auditability and regulatory oversight, providing regulators with real‑time data on ownership structures and transaction flows. The coalition’s request is not without safeguards. In their proposal, they suggested a tiered approach where the cap could be adjusted based on the maturity of the underlying technology, the robustness of compliance mechanisms, and the demonstrated ability of participants to manage anti‑money‑laundering (AML) and know‑your‑customer (KYC) obligations. They also recommended periodic reviews—every six months—to assess market impact, risk exposure, and the effectiveness of supervisory tools.
This framework aims to balance the need for regulatory prudence with the imperative to foster innovation. EU regulators have responded positively to the coalition’s engagement, acknowledging the importance of aligning the pilot’s parameters with market realities.
In a recent statement, the European Commission’s Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) indicated that it would convene a working group comprising regulators, industry representatives, and consumer protection agencies to revisit the cap. The working group is expected to deliver a set of recommendations by early next year, potentially paving the way for a revised tokenisation regime that could serve as a template for future EU‑wide legislation. The implications of a lifted cap extend beyond the immediate participants in the pilot. A more permissive environment could accelerate the integration of tokenised assets into the broader EU capital markets infrastructure, encouraging the development of ancillary services such as custodial solutions, token‑based clearing and settlement platforms, and specialised legal frameworks for digital securities.
It could also stimulate cross‑border collaboration, as issuers from non‑EU jurisdictions might be more inclined to tap into the EU market, knowing that tokenisation pathways are not artificially constrained. In summary, the coalition’s appeal to the EU reflects a pivotal moment in the evolution of digital finance. By urging the removal or substantial increase of the tokenisation cap, Nasdaq, Börse Stuttgart, and their partners are not merely seeking regulatory relief; they are advocating for a more dynamic, inclusive, and efficient financial ecosystem that leverages the transformative potential of blockchain technology. The outcome of this dialogue will likely shape the trajectory of tokenised securities in Europe for years to come, influencing how investors, issuers, and regulators navigate the intersection of traditional finance and emerging digital innovations.