European Finance Groups Push to Remove DLT Market Cap

A coalition of European financial and tokenization groups has urged EU lawmakers to remove a proposed 100 billion euro cap ($116.3 billion) on tokenized financial instruments or raise it to at least 500 billion euro.

The draft letter, dated Sept. 7 and addressed to EU Council members and the European Parliament’s Economic and Monetary Affairs Committee, said the 500 billion euro threshold should serve as a baseline if lawmakers decide to retain a cap.

Among the groups signing the letter were Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute and Axiology.

The letter said some existing European projects already reach 350 billion euro in scale and plan further growth, arguing that the proposed 100 billion euro ceiling would be insufficient.

The groups contrasted the proposed EU limits with the US, where “a dominant settlement platform is enabled to tokenise US equities and other assets without volume caps,” which they said could cover as much as 150 trillion euro in assets.

European finance groups call for removal of DLT regime cap.
Source: Industry draft letter

The European Commission has proposed raising the current 6 billion euro limit to as much as 100 billion euro as part of its Market Integration and Supervision Package, which includes revisions to the Distributed Ledger Technology (DLT) Pilot Regime.

The DLT Pilot Regime, which took effect in 2023, allows financial firms to test blockchain-based trading and settlement of assets such as stocks and bonds under exemptions from certain EU financial rules.

The letter said the thresholds apply to the market value of financial instruments admitted to DLT infrastructure rather than their trading volume, making the proposed 100 billion euro cap relatively small compared with global equity markets.

Related: Tokenized RWA surge to $4T may push LINK to $200 by end-2030: Standard Chartered

European firms ramp up pressure on DLT rules

The letter follows months of pressure from financial and tokenization firms seeking changes to the EU’s DLT Pilot Regime.

In April, 39 financial firms and industry groups, including 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 euro and 150 billion euro. The April letter also called for broader asset eligibility and the removal of time limits on licenses issued under the regime.

The April push followed a similar call in February from tokenization and market infrastructure firms including Securitize, 21X and Boerse Stuttgart, which warned that existing asset limits, volume caps and time-limited licenses were preventing regulated onchain markets from scaling in Europe.

The February warning contended that without faster changes, liquidity could migrate to US markets as regulators there moved toward larger-scale tokenization and onchain settlement.

The total value of distributed real-world assets (RWA) stands at about $39.15 billion, with US Treasury debt the largest category at roughly $15.8 billion.

Distributed RWA value has reached $39.15 billion, excluding stablecoins. Source: RWA.xyz

Related: US, UK reaffirm support for stablecoins, tokenization in joint financial regulation talks