In a pressing appeal, eight tokenization firms operating in Europe have raised alarms regarding the European Union”s current regulatory framework, specifically the DLT Pilot Regime. They assert that the existing limitations could hinder the growth of tokenized capital markets and potentially drive liquidity away from Europe toward the United States.
The group, which includes prominent companies such as Securitize, 21X, and Seturion from the Boerse Stuttgart Group, emphasizes that the DLT Pilot Regime is excessively restrictive. They argue that these regulations are stifling the development of tokenized financial infrastructure.
The firms have proposed a series of amendments aimed at fostering a more conducive environment for tokenization within the EU. Their recommendations include lifting restrictions on the types of assets eligible for tokenization, significantly increasing the transaction volume cap from €6–9 billion to a staggering €100–150 billion, and removing the six-year licensing limit currently imposed on tokenization initiatives.
According to the firms, failure to implement these changes could have dire consequences for Europe”s financial competitiveness. They warned that inaction may lead to a permanent migration of liquidity to U.S. markets, thereby jeopardizing the euro”s standing in global finance.
The letter articulates a sense of urgency, noting that while European policymakers deliberate, the U.S. is making notable advancements. Developments such as SEC no-action letters, T+0 instant settlement projects, and 24/7 trading plans for tokenized securities by major exchanges like Nasdaq and NYSE highlight this disparity. Furthermore, the CME Group is collaborating with Google to introduce tokenized collateral, with an anticipated launch in 2026.
Tokenization, which facilitates the representation of real-world assets—such as stocks and bonds—as blockchain-based tokens, offers significant advantages including faster settlement times, enhanced transparency, and the potential for fractional ownership. Market analysts predict that the tokenized asset sector could expand into trillions of dollars over the next few years.
The group stresses that decisive action is required before the Market Integration and Supervision Package (MISP) comes into effect in 2030. They believe that the regulatory limits imposed by the pilot program could transform Europe”s competitive edge into a regulatory barrier, allowing the United States to emerge as the dominant force in blockchain-based capital markets.
In summary, the firms are calling for regulators to urgently revise the framework governing tokenization, advocating for a more open market. This would entail higher transaction volumes, extended license durations, and the removal of asset restrictions, ensuring that European markets remain robust and competitive against their U.S. counterparts.
