EU Finance Groups Urge Removal of Cap on Tokenized Securities

A coalition of European market infrastructure and tokenization groups is urging EU lawmakers to rethink a proposed cap on tokenized financial instruments, arguing that the current ceiling is too low for Europe to scale blockchain-based trading and settlement.

In a draft letter dated Sept. 7 and addressed to EU Council members and the European Parliament’s Economic and Monetary Affairs Committee, the signatories ask that a proposed limit of 100 billion euros be either removed or lifted to at least 500 billion euros if lawmakers decide to keep any cap at all.

Key takeaways

• A Sept. 7 industry letter calls the EU’s proposed 100 billion euro cap on tokenized financial instruments “insufficient” for scaling.
• The coalition proposes 500 billion euros as a baseline threshold if a cap remains.
• Signatories argue the EU limit is tied to market value of instruments admitted to DLT infrastructure, which they say makes it small versus global equity markets.
• The letter points to differences with the US approach, where it claims tokenization can proceed without comparable volume caps.
• The push follows earlier EU industry campaigns in February and April aimed at expanding the DLT Pilot Regime’s scope and thresholds.

Why the coalition is targeting the 100 billion euro threshold

The letter—available via industry site ADAN—states that some existing European tokenized-finance initiatives already reach a scale of roughly 350 billion euros and are planning further growth. Against that backdrop, the coalition says the European Commission’s proposed 100 billion euro ceiling would constrain development during a period when tokenized markets are still trying to find liquidity, operational scale, and investor reach.

Rather than focusing on trading activity, the letter highlights that the regime’s thresholds are applied to the market value of financial instruments admitted to DLT infrastructure. The groups argue that, in practice, this design makes the proposed 100 billion euro figure look relatively small when compared with the size of global equity markets.

Among the signatories are Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute, and Axiology. The groups frame the request as a practical issue for regulated tokenization, not a theoretical policy debate about whether digital securities should exist.

Reference points: Europe’s DLT Pilot Regime vs. US tokenization capacity

One of the letter’s central comparisons is with the United States. The signatories claim that in the US, “a dominant settlement platform is enabled to tokenise US equities and other assets without volume caps,” adding that such a structure could support tokenization exposure on the order of 150 trillion euros in assets.

While the EU coalition’s statement is written as an argument for policy adjustment, it is also a signal about where scaling pressure is heading. If European rules impose tighter quantitative limits than US arrangements, tokenized issuance, settlement, or liquidity development may be more attractive elsewhere—especially for institutions that want to operate across jurisdictions using consistent infrastructures.

The coalition also notes that the EU Commission’s broader revision effort is part of its Market Integration and Supervision Package. That package includes changes to the Distributed Ledger Technology (DLT) Pilot Regime—an EU framework designed to let regulated firms test blockchain-based trading and settlement under exemptions from certain financial rules.

What the EU regime currently allows—and what’s proposed

The DLT Pilot Regime, according to ESMA, took effect in 2023. It enables financial firms to trial blockchain settlement for assets including stocks and bonds under specific conditions, with regulatory exemptions meant to reduce friction while authorities observe how onchain systems perform.

Under the Commission proposal referenced in the industry letter, the regime’s current 6 billion euro limit could rise to as much as 100 billion euros. The coalition argues that any meaningful scaling step should correspond better to market reality—especially if the limit is assessed based on admitted instrument market value rather than transaction volume.

In its Sept. 7 draft letter, the industry group suggests that lawmakers should adopt 500 billion euros as an interim “baseline” threshold if they retain a cap at all. The request effectively pushes for a step-change in the headroom available for tokenized financial instruments rather than a modest increase.

The pressure campaign: from February warnings to April and now September

This Sept. 7 intervention follows earlier public pushes from the same broad ecosystem of tokenization and market infrastructure firms.

In February, tokenization and market infrastructure companies—including Securitize, 21X, and Boerse Stuttgart—warned that existing asset limits, volume caps, and time-limited licenses were preventing regulated onchain markets from scaling within Europe. That earlier warning also argued that, without policy changes, liquidity could migrate to US markets as regulators there move toward larger-scale tokenization and onchain settlement.

In April, the effort broadened to include 39 financial firms and industry groups. That campaign, which included Nasdaq and Boerse Stuttgart, urged EU policymakers to fast-track changes to the DLT Pilot Regime and raise its overall limit to between 100 billion euros and 150 billion euros. The April letter also asked for broader asset eligibility and for removing time limits on licenses issued under the regime.

By Sept. 7, the coalition’s requested threshold has moved higher—shifting from an upper band of 100–150 billion euros previously to a minimum baseline of 500 billion euros, or no cap at all.

The underlying context for these arguments is that distributed real-world assets (RWA) are growing but remain concentrated in a limited set of categories. A frequently cited industry metric, RWA.xyz, places the total value of distributed RWA at about $39.15 billion (excluding stablecoins), with US Treasury debt described as the largest category at roughly $15.8 billion.

What to watch next

Lawmakers now have competing inputs: the Commission’s proposed 100 billion euro ceiling inside the Market Integration and Supervision Package, and the industry coalition’s demand for either removal of the cap or a substantial increase to at least 500 billion euros. The next key question for market participants is whether EU regulators will treat capacity limits as a temporary pilot constraint—or as a scaling throttle—and how that choice affects where liquidity and tokenized issuance concentrate as the DLT Pilot Regime evolves.