A coalition of European financial and tokenization organizations is urging EU policymakers to remove a proposed €100 billion ($116.3 billion) ceiling on financial instruments admitted to blockchain based market infrastructure, arguing that the limit could prevent regulated tokenized markets from reaching institutional scale.
In a draft letter dated Sept. 7, organizations including Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute and Axiology called for the cap to be eliminated. If policymakers decide to retain a limit, the coalition said it should be raised to at least €500 billion.
The proposal comes as the European Union considers changes to its Distributed Ledger Technology Pilot Regime, which has allowed regulated firms to experiment with blockchain-based trading and settlement since 2023.
Key Takeaways
- European finance and tokenization groups want the proposed €100 billion DLT Pilot Regime cap removed.
- If a limit remains, the coalition recommends a minimum threshold of €500 billion.
- The European Commission has proposed increasing the existing €6 billion limit to as much as €100 billion.
- Industry groups argue some European projects already operate at scales of around €350 billion.
- The coalition warns that restrictive rules could put European tokenization markets at a disadvantage to the US.
Coalition Says €100 Billion Would Restrict Growth
The Sept. 7 letter was addressed to members of the EU Council and the European Parliament’s Economic and Monetary Affairs Committee. Its central argument is that the Commission’s proposed €100 billion ceiling would still be too restrictive for financial institutions seeking to move large securities markets onto distributed ledger infrastructure.
The coalition said some existing European projects already operate at a scale of around €350 billion and expect further expansion. That means a €100 billion limit could become a constraint before blockchain based securities infrastructure reaches broader institutional adoption.
Importantly, the threshold concerns the market value of financial instruments admitted to DLT infrastructure rather than the amount of trading conducted through those systems. The groups therefore argue that the limit should be assessed against the size of securities markets that could eventually move onto blockchain infrastructure rather than current tokenized asset trading volumes.
EU Proposes Raising Existing €6 Billion Limit
The European Commission has already proposed significantly expanding the DLT Pilot Regime. Under the Market Integration and Supervision Package, the existing €6 billion threshold could increase to as much as €100 billion.
Introduced in 2023, the DLT Pilot Regime allows qualifying market infrastructure operators to test distributed ledger technology for trading and settling financial instruments such as shares and bonds. It provides exemptions from certain existing EU financial market requirements where those rules could otherwise prevent the use of blockchain-based infrastructure.
The proposed increase from €6 billion to €100 billion would therefore represent a substantial expansion. Industry groups, however, argue that it remains insufficient for a market intended to accommodate large financial institutions.
Industry Points to US Tokenization Rules
The coalition also used developments in the United States to support its argument. According to the letter, a dominant US settlement platform can tokenize US equities and other financial assets without equivalent volume restrictions. The groups said the potential asset base could reach approximately €150 trillion, highlighting the difference between the scale available in the US and the proposed European ceiling. Their concern is that strict limits could discourage institutions from building large tokenized securities businesses in Europe if competing markets offer greater room to expand.
The argument does not mean that €150 trillion of US securities have already been tokenized. Rather, the figure represents the much larger pool of assets that could potentially be covered by infrastructure operating without the proposed European cap.
Pressure to Reform DLT Rules Has Been Building
The latest letter is part of a broader industry campaign to change the DLT Pilot Regime. In April, 39 financial institutions and industry organizations, including Nasdaq and Boerse Stuttgart, called for faster reforms and proposed increasing the regime’s overall limit to between €100 billion and €150 billion. They also sought broader eligibility for financial instruments and the removal of time limits attached to licenses.
Earlier, in February, firms including Securitize, 21X and Boerse Stuttgart warned that existing asset thresholds and time-limited permissions were making it difficult for regulated blockchain markets to expand. Those groups argued that Europe risks losing tokenization activity and liquidity to the US if its regulatory framework does not accommodate larger deployments.
Tokenized Asset Market Continues to Expand
The lobbying comes as tokenized real world assets continue to gain traction. According to data cited in the supplied material, distributed real world assets currently represent approximately $39.15 billion in value, with tokenized US Treasury debt accounting for about $15.8 billion. The figures remain small compared with traditional securities markets, but financial institutions are increasingly exploring tokenized bonds, equities and funds alongside blockchain-based settlement infrastructure.
Conclusion
The European Commission’s proposed increase from €6 billion to €100 billion would considerably expand the DLT Pilot Regime, but major financial and tokenization groups argue it still falls short of what institutional markets require. Their preferred outcome is to remove the ceiling altogether. If EU policymakers insist on maintaining one, the coalition wants at least €500 billion of capacity.
The decision could determine whether the DLT Pilot Regime remains primarily an experimental framework or develops into infrastructure capable of supporting tokenized securities at a much larger institutional scale.
