Why Are EU Groups Fighting the Tokenized Securities Cap?

In brief: A coalition of European exchanges, banks, and market operators is pressing the EU to remove the volume cap on digital securities under the DLT Pilot Regime, or to raise it to at least 1.5 trillion euros. Roughly 40 firms, including Nasdaq and Boerse Stuttgart, argue that the current 6 billion euro ceiling is too small to justify institutional participation and risks pushing digital-securities activity toward the United States. The request lands as the European Commission negotiates a broad overhaul that would lift the cap to 100 billion euros.

The DLT Pilot Regime is the EU framework that lets exchanges and settlement systems trade and settle securities that qualify as financial instruments on distributed-ledger infrastructure. It began applying on 23 March 2023 under Regulation (EU) 2022/858, and it was designed as a temporary sandbox so that regulators and market operators could gain experience with programmable, ledger-based securities before writing permanent rules. Three years in, the industry's verdict is blunt: the sandbox is too small to be useful, and a group of about 40 firms has now asked Brussels to say so in law.

What are the DLT Pilot Regime caps, and why do they matter?

The binding constraint is a set of volume limits. Under the regime as it stands, digital securities admitted to a single venue cannot collectively exceed 6 billion euros in market value, and once that figure reaches 9 billion euros an exit threshold forces the operator to wind activity down. On top of the aggregate ceiling, each instrument must clear per-issuance thresholds: shares are eligible only where the issuer's market capitalisation is below 500 million euros, bonds only where the issue size is below 1 billion euros, and fund units only where assets under management sit below 500 million euros.

Those numbers were meant to contain risk while the experiment ran. In practice they excluded the instruments institutions most want to issue and settle on a ledger: large sovereign and corporate bonds, blue-chip equities, and money-market instruments at scale. As Ledger Insights put it, large incumbents chose to sit out the regime because the caps were prohibitively small for institutional usage. A framework that cannot accommodate a single benchmark government bond issue is not a framework a bank builds a business on.

Who is asking for the change, and what exactly do they want?

The signatories run to roughly 40 organisations and read like a cross-section of European market plumbing rather than a crypto lobby. They include Nasdaq, Boerse Stuttgart, and other exchanges and financial-market infrastructures, alongside trade bodies. Their ask is twofold and deliberately sequenced. The first-best outcome is to remove the volume cap entirely, on the logic that a permanent, credible market cannot operate under a ceiling that triggers forced wind-downs. Failing that, they want the starting threshold set at no less than 1.5 trillion euros, a figure they argue reflects the real size of the markets the technology is meant to serve.

The competitive argument sits underneath the numbers. Tokenization firms have warned that the pilot's constraints risk pushing markets to the US, where digital-securities activity faces a different regulatory posture. For issuers weighing where to build programmable, composable instruments, a jurisdiction with a hard 6 billion euro ceiling is a difficult sell against one without.

How does this fit the Commission's own reform plan?

The request is not arriving in a vacuum. In December 2025 the European Commission launched the Market Integration and Supervision Package, a broad set of financial-legislative proposals that includes a section on the DLT Pilot Regime. As Taylor Wessing summarised, the package would make the regime permanent and materially expand it, lifting the 6 billion euro cap to 100 billion euros and widening the range of eligible instruments beyond the current shares, bonds, and funds.

That is a large increase, and it moves in the industry's direction. But 100 billion euros still sits well below the 1.5 trillion euro fallback the coalition is requesting, which is the crux of the disagreement. The firms are effectively telling Brussels that its own proposed expansion, though welcome, does not go far enough to make Europe a serious venue for institutional digital securities. The proposals now enter trilogue negotiations between the Commission, the European Parliament, and the Council, a process Bird & Bird expects to run through 2026, with any adopted rules potentially applying after a transitional period of 12 to 24 months.

What has the regulator itself said?

The supervisory view is closer to the industry's than the current statute suggests. In a June 2025 report on the functioning and review of the regime, the European Securities and Markets Authority recommended making the regime permanent and proposed more flexible thresholds, acknowledging that the design as written had produced limited uptake. National regulators have pushed in the same direction: the French and Italian authorities published a joint position paper in April 2025 arguing for a more competitive European pilot. When the regulator, two national supervisors, and 40 market participants all say the same thing, the caps look less like prudent risk management and more like a ceiling the market has outgrown.

For institutions, the substance underneath the lobbying is what matters. The DLT Pilot Regime is Europe's live attempt to give securities the properties that ledger-based infrastructure makes possible: programmable settlement, composable instruments, and auditable records that reconcile in near real time. The cap fight is really a question of whether that infrastructure can carry meaningful size. The direction of travel, from a 6 billion euro sandbox toward a 100 billion euro floor and an industry ask measured in trillions, tells issuers where this is heading, even if the final number is unsettled.

Frequently asked questions

What is the current cap on digital securities under the DLT Pilot Regime? Digital securities on a single venue cannot collectively exceed 6 billion euros in market value, with a 9 billion euro exit threshold that forces the operator to wind down. Per-instrument limits also apply, including a 500 million euro market-capitalisation ceiling for shares and a 1 billion euro issue-size ceiling for bonds, under Regulation (EU) 2022/858.

Has the EU agreed to remove or raise the cap? Not yet. The European Commission proposed raising the cap to 100 billion euros in its December 2025 Market Integration and Supervision Package, but that proposal is still in trilogue negotiations expected to run through 2026. The industry's request to scrap the cap or set it at 1.5 trillion euros goes further than the Commission has committed to.

Why does the cap matter for issuers evaluating digital securities in Europe? The thresholds exclude large bond and equity issues from the regime, which is why major institutions have largely stayed out. A higher or removed cap would let issuers place benchmark-sized instruments on programmable, auditable infrastructure inside a regulated EU framework rather than routing that activity to other jurisdictions. This is precisely the institutional gap Issuant is built to serve.