In a coordinated effort to influence European regulatory policy, a coalition of major financial market participants—including Nasdaq, the Stuttgart Stock Exchange (Börse Stuttgart), and a range of other exchanges and token‑service providers—has formally requested that the European Union either remove the existing ceiling on tokenised assets or raise it substantially. The coalition’s position paper, submitted to the European Commission and the European Parliament’s Committee on Economic and Monetary Affairs, argues that the current cap, which limits the total value of assets that can be tokenised under the EU’s experimental framework, is far too restrictive for the rapid growth and diversification of digital finance across the continent. The request comes against the backdrop of the EU’s broader “Tokenisation Pilot” initiative, launched in 2022 as part of the Union’s Digital Finance Strategy.
The pilot was designed to test the legal, technical, and supervisory mechanisms needed to support the issuance, trading, and settlement of tokenised securities, commodities, and other financial instruments on distributed ledger technology (DLT) platforms. Under the pilot’s original terms, participants were allowed to tokenise assets up to a total value of €1 billion, a figure that was intended to be a safe‑guard against systemic risk while the regulatory framework was still being refined. However, the coalition argues that the €1 billion ceiling quickly proved inadequate.
Several ongoing projects—ranging from tokenised corporate bonds issued by German Mittelstand firms to large‑scale tokenised real‑estate funds in France and Italy—have already exceeded the limit, forcing participants to either truncate their offerings or abandon promising use cases altogether. "We see a clear mismatch between the ambition of the EU’s Digital Finance Strategy and the operational constraints imposed by the current cap," said a spokesperson for Nasdaq’s European division. "If the EU truly wishes to foster innovation, it must provide a regulatory environment that scales with market demand, not one that stifles it." The coalition’s letter outlines three core arguments for raising or eliminating the cap: 1. **Market Demand and Liquidity**: Empirical data collected from pilot participants shows that tokenised assets attract a broader investor base, including retail participants, institutional investors, and cross‑border funds.
By limiting the total value, the EU inadvertently curtails liquidity, which is essential for price discovery and efficient capital allocation. 2. **Competitive Disadvantage**: Outside the EU, jurisdictions such as the United States, Singapore, and the United Arab Emirates have adopted more flexible tokenisation regimes, allowing market participants to tokenise assets worth tens of billions of euros.
The EU risks losing innovative firms and capital flows to these more permissive environments if it does not adjust its framework. 3.
**Regulatory Learning Curve**: The pilot was explicitly designed as a learning exercise. By permitting larger volumes, regulators can gather richer data on risk management, anti‑money‑laundering (AML) controls, and market abuse detection. This information is vital for shaping a robust, proportionate, and future‑proof regulatory regime.
In addition to these arguments, the coalition highlights several concrete examples that illustrate the practical implications of the cap. One notable case involves a tokenised green bond issued by a consortium of renewable‑energy developers in Spain. The bond, initially structured for €200 million, attracted investor interest that quickly grew to €500 million. Under the current limit, the project would have to be split into multiple tokenised tranches, increasing administrative overhead and confusing investors.
Another example is a tokenised share‑based crowdfunding platform in the Netherlands, which aims to democratise equity ownership for startups. The platform’s pilot phase reached €150 million in tokenised equity before hitting the ceiling, forcing the founders to pause further fundraising.
The coalition also stresses that raising the cap does not mean abandoning prudential safeguards. They propose a tiered approach where higher caps are granted to participants that demonstrate robust governance, transparent reporting, and strong AML/KYC procedures. Such a framework would align risk exposure with the maturity of the participant’s internal controls, ensuring that the expansion of tokenisation activities does not compromise market stability.
European regulators have responded with cautious openness. In a recent hearing before the Committee on Economic and Monetary Affairs, the European Banking Authority (EBA) acknowledged the coalition’s concerns and indicated that a review of the cap is scheduled for the second quarter of 2025. The EBA’s director‑general emphasized that any amendment would be data‑driven, taking into account both the benefits of increased market depth and the need to protect investors from potential fraud or systemic shocks. Industry observers note that the timing of the coalition’s request aligns with a broader push within the EU to accelerate the adoption of digital assets.
The European Commission’s recent proposal for a Markets in Crypto‑Assets (MiCA) regulation, which aims to create a harmonised framework for crypto‑assets, signals a willingness to integrate innovative financial products into the mainstream. Raising the tokenisation cap could therefore serve as a complementary measure, reinforcing the EU’s ambition to become a global hub for digital finance.
Stakeholders outside the immediate pilot, such as fintech incubators, venture capital firms, and even traditional banks, have voiced support for the coalition’s proposal. Many argue that tokenisation can unlock new sources of capital for sectors that traditionally face financing constraints, such as small‑ and medium‑sized enterprises (SMEs) and sustainable infrastructure projects. By enabling fractional ownership and seamless cross‑border settlement, tokenised securities could dramatically reduce transaction costs and speed up capital deployment. In summary, the coalition’s appeal to the EU represents a pivotal moment in the continent’s digital finance journey.
By urging the removal or substantial increase of the tokenisation cap, Nasdaq, Börse Stuttgart, and their partners seek to align regulatory parameters with the evolving realities of the market. Their argument rests on demonstrable demand, competitive pressures, and the educational value of a larger pilot. As the EU deliberates on the next steps, the outcome will likely shape the trajectory of tokenised assets not only within Europe but also on the global stage, influencing how investors, issuers, and regulators interact in an increasingly digitised financial ecosystem.