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

In a draft letter dated Sept. 7 and addressed to EU Council members and the European Parliament’s Economic and Monetary Affairs Committee, the groups said 500 billion euro should be the minimum threshold if lawmakers decide to retain a cap. The industry draft letter was signed by Nasdaq, Boerse Stuttgart Group, Securitize, the European Ethereum Institute and Axiology, among others.

The signatories said some existing European projects have already reached a scale of 350 billion euro and plan to expand further. They argued that a 100 billion euro ceiling would therefore be insufficient.

The groups compared the proposed EU limits with the United States, where “a dominant settlement platform is enabled to tokenise US equities and other assets without volume caps.” According to the letter, such a platform could cover as much as 150 trillion euro in assets.

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

The DLT Pilot Regime took effect in 2023 and allows financial firms to test blockchain-based trading and settlement for assets such as stocks and bonds under exemptions from certain EU financial rules. The letter noted that the thresholds apply to the market value of financial instruments admitted to DLT infrastructure, rather than their trading volume. That distinction makes the proposed cap a limit on the value of instruments that can enter the pilot’s infrastructure, not a direct limit on how frequently those instruments can trade. As a result, the groups said, the proposed 100 billion euro cap is relatively small compared with global equity markets.

European firms increase pressure for DLT rule changes

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

In April, 39 financial firms and industry groups, including Nasdaq and Boerse Stuttgart, called on EU policymakers to fast-track amendments to the regime and raise its overall limit to between 100 billion euro and 150 billion euro. That letter also urged broader asset eligibility and the removal of time limits on licenses issued under the regime.

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

The February warning said that, without faster changes, liquidity could migrate to US markets as regulators there moved toward larger-scale tokenization and onchain settlement. The debate over the cap therefore remains linked to the separate questions of which assets can qualify for the pilot and how long firms can operate under its licenses.

The total value of distributed real-world assets (RWA) is about $39.15 billion, excluding stablecoins, according to RWA.xyz. US Treasury debt is the largest category, representing roughly $15.8 billion.

Source: Cointelegraph