Nasdaq, Boerse Stuttgart and several European finance and crypto industry groups have sent a joint letter to the European Council and the European Parliament, calling for the European Union to remove the market capitalization cap on tokenized securities under its Distributed Ledger Technology, or DLT, pilot regime. If the cap stays, they want it raised from the proposed €100 billion to at least €1.5 trillion, or about $1.74 trillion.
The public letter was signed by France’s digital asset association Adan, the Crypto Council for Innovation and the European Ethereum Institute. The groups said the European Commission’s proposed new threshold is still too low and could limit Europe’s room to grow in the global push toward asset tokenization.
Industry groups say the proposed €100 billion ceiling is still too low
The EU’s DLT Pilot Regime allows operators to test the trading and settlement of tokenized stocks, bonds and investment funds while receiving exemptions from some existing financial rules. The European Commission previously said in its official explanation that participation in the regime had been “limited,” which is why it proposed an expanded framework.
The dispute now centers on the size of the cap. The Commission has proposed raising the current limit from €6 billion to €100 billion. Adan said that increase still falls short given the pace of development in the global market.
The letter laid out several figures:
- Some existing tokenization projects in Europe have already reached a market value of €350 billion, or 3.5 times the proposed cap.
- The proposed cap is €100 billion, equal to about 16.7 times the current limit.
- The industry is asking for the cap to be eliminated, or at minimum lifted to €1.5 trillion, which is 15 times the proposed level.
- The benchmark applies to the market value of approved securities rather than trading volume, meaning platform capacity depends on the total value of supported instruments, not actual trading frequency.
The letter did not identify the €350 billion projects by name and did not explain how that figure was calculated.
Objection to higher limits for central securities depositories
Another major point in the letter was opposition to what the signatories described as unequal limits. Under the EU proposal, central securities depositories, or CSDs, could be allowed to operate with higher capacity thresholds than newer blockchain-based market operators.
CSDs are part of traditional financial infrastructure, maintaining securities records and handling settlement, and are typically run by governments or major exchanges. The industry groups argued that if CSDs are allowed to process larger volumes of tokenized assets while blockchain-native platforms face tighter restrictions, new entrants will be put at a disadvantage.
Adan and the other signatories said the original purpose of the DLT Pilot Regime was to let innovative technology and traditional finance compete within the same framework, and that differentiated caps would run against that objective.
Letter contrasts the EU approach with the U.S. market
The signatories also compared Europe’s more restrictive framework with the U.S. market. The letter referred to a “dominant U.S. settlement platform” that can tokenize stocks and other assets without a trading volume cap, though it did not identify the platform.
The industry groups said that if Europe remains too conservative on tokenized securities, the U.S. market could move ahead first in building scale and setting standards, widening the gap in financial market infrastructure across the Atlantic.
If the cap remains, the industry wants it to be adjustable
If EU lawmakers decide to keep a ceiling, the signatories said it should be adjustable over time by the European Commission as the market develops, rather than fixed as a hard limit.
That request reflects the industry’s main position: the regulatory framework should grow with the market instead of constraining future expansion with a static number.
Tokenized securities are becoming a key front in the RWA market
Asset tokenization, often grouped under the real-world asset, or RWA, trade, has increasingly been seen as one of blockchain’s closest links to mainstream finance. The report pointed to UBS issuing a tokenized fund on Ethereum and Nasdaq’s investment in Kraken parent Payward to build a stock token platform as signs that traditional financial institutions are stepping up their positioning.
Any change to the DLT Pilot Regime cap would directly affect the ceiling for Europe’s tokenized securities market. If the limit stays low, larger institutions may shift activity to jurisdictions with fewer restrictions. If the cap is removed or raised substantially, Europe could have a stronger shot at becoming one of the major centers of tokenized finance.
What to watch next
- Whether the European Parliament and the European Council accept the industry’s recommendation to revise the cap.
- Whether the final EU version keeps different treatment for CSDs and blockchain-based platforms.
- Whether tokenization activity in the U.S., especially the work tied to Nasdaq and Payward, becomes a benchmark for Europe.