A coalition of European tokenization companies is calling on European Union policymakers to revise key elements of the bloc’s Distributed Ledger Technology Pilot Regime, warning that current restrictions risk slowing innovation and pushing digital asset activity to other jurisdictions.
The group, which includes firms such as 21X, Central Securities Depository Prague, Boerse Stuttgart Group, Lise, Axiology and other market participants, has reportedly sent a joint letter to EU authorities seeking targeted amendments to the regulatory sandbox. The DLT Pilot Regime was introduced to allow trading and settlement of tokenized financial instruments within a controlled framework, but signatories argue that its structural limits are discouraging broader participation.
At the center of the debate are asset eligibility rules and volume caps embedded in the framework. Under Article 3 of the regime, only certain financial instruments qualify. Shares are limited to issuers with a market capitalization below 500 million euros, while bond issuances are capped at one billion euros. The pilot also restricts the aggregate market value of DLT market infrastructure to nine billion euros.
Industry executives contend that these thresholds no longer reflect the scale at which tokenization is evolving globally. In their view, the limitations constrain established players and prevent larger, more liquid assets from being tested on distributed ledger platforms. The group is advocating for the removal of asset specific caps and for raising the overall market value ceiling to as much as 150 billion euros.
Another point of concern is the six year licensing limit attached to authorizations granted under the pilot. Companies argue that long term infrastructure investments require regulatory continuity beyond a fixed experimental window. Removing the time constraint, they say, would offer greater certainty for capital markets participants considering tokenized issuance or trading venues within the EU.
The letter reportedly characterizes the proposed adjustments as targeted quick fixes that could be implemented without dismantling the broader regulatory structure. Signatories warn that prolonged deliberation could delay meaningful application of tokenized market infrastructure until the end of the decade, weakening Europe’s competitive position in digital finance.
The appeal comes amid increasing global momentum around tokenization of securities, including bonds, funds and other regulated instruments. In the United States and parts of Asia, regulatory frameworks and private sector initiatives have accelerated pilot programs for blockchain based settlement and digital asset trading venues.
EU policymakers have positioned the DLT Pilot Regime as a measured approach designed to balance innovation with investor protection and financial stability. However, market participants argue that overly tight constraints may unintentionally limit liquidity and discourage international firms from launching products within the bloc.
As tokenization moves from proof of concept to production scale, the outcome of this debate could influence where digital capital markets infrastructure develops most rapidly in the coming years.
