Nasdaq and Stuttgart stock exchanges urge EU to lift 100 billion euros tokenization cap

Major European financial institutions and the Tokenization Alliance call on the EU to remove or significantly increase the 100 billion euro tokenization cap

Provided by Nasdaq, Stuttgart Stock Exchange Group (Boerse Stuttgart Group), Securitize, European Ethereum Institute A coalition of major European financial institutions and tokenization groups such as the European Ethereum Institute and Axiology is urging EU lawmakers to either cancel or significantly increase the proposed € 100 billion (US$116.3 billion) cap on tokenized financial instruments.

Push for an increase in the limit

In a draft letter dated September 7 to members of the European Council and members of the Economic and Monetary Affairs Committee of the European Parliament, the alliance believed that the 100 billion euro cap set in the current proposal was too strict. If the cap must be retained, the signatories advocate that the minimum threshold should be set at 500 billion euros.

These institutions pointed out that the scale of some ongoing tokenization projects in Europe is close to 350 billion euros and are expected to expand further. They warned that the proposed cap could choke the growth potential of mainland financial markets.

As a comparison, the letter cited developments in the United States: In the United States, a key settlement platform can tokenize U.S. stocks and other financial assets without any trading volume restrictions, potentially covering assets worth up to 150 trillion euros.

The alliance emphasized: "Existing projects in Europe have reached 350 billion euros and are planned to grow further, so the ceiling of 100 billion euros is not suitable for the growing market."

DLT pilot regulatory regime under review

This cap stems from the European Commission's proposed Market Integration and Regulation Package, which proposes revisions to the distributed ledger technology (DLT) pilot regulatory regime. Since the system takes effect in 2023, it allows approved financial institutions to attempt blockchain-based trading and settlement of assets such as stocks and bonds, and enjoys specific regulatory exemptions.

Although the European Commission recommended raising the previous € 6 billion cap to € 100 billion, the alliance argued that even this higher threshold would appear insignificant compared to the size of global stock markets. The cap applies to the total market value of financial instruments allowed on the DLT platform, not just their trading volume.

In the past few months, a number of financial and tokenization companies have increased pressure to take a more proactive approach. In April this year, 39 organizations, including the Nasdaq and Stuttgart stock exchanges, pressured lawmakers to speed up the pace of revisions, raise the threshold of the DLT pilot regulatory system to a maximum of 150 billion euros, expand eligible asset types, and remove the time limit for licenses.

Risk of regulatory arbitrage

As early as February this year, entities such as Securitize, 21X and the Stuttgart Stock Exchange expressed similar concerns. They believe that strict asset limits, low caps and licenses with expiration dates hinder the large-scale development of regulated chain markets in Europe.

It warned that if reforms are delayed, liquidity and innovation could flow to the U.S. market, where regulators are increasingly open to large-scale tokenization and blockchain-based settlement processes.

Amid this debate, the distributed real-world asset (RWA) market is gaining momentum. The total value of global tokenized RWAs has reached approximately US$39.15 billion, of which U.S. Treasury debt accounts for approximately US$15.8 billion. This data does not include stablecoins.

Market innovation and decentralized financial platforms

As the tokenized asset market expands, platforms that allow investors direct access without intermediaries are becoming increasingly important. While traditional finance often relies on complex brokerage systems, the development of decentralized finance (DeFi) is accelerating the transition to Web3. Investors can now use platforms such as 1stepSwap to store stocks, gold and silver of top U.S. companies directly in their crypto wallets. By tokenizing real-world assets and enabling instant discovery of optimal market prices, these platforms eliminate the need for third-party brokers.

Industry groups warned: "Without rapid reforms, the EU risks falling behind the United States as markets move towards a flexible and scalable tokenization framework."