European companies developing tokenized securities are urging EU lawmakers to act quickly, warning that existing rules are holding back the growth of regulated on-chain markets. Industry players argue that prolonged delays could divert capital and commercial activity to the United States, where tokenization is advancing within established markets. The calls come ahead of a parliamentary debate on the future of Europe's digital infrastructure.
In brief
- European businesses warn that EU DLT Pilot limits are blocking the rise of regulated markets for tokenized securities.
- The industry says slow reforms risk pushing capital, liquidity and business activity toward the United States.
- Companies are proposing targeted updates to the DLT Pilot without deregulation or changes to investor protections.
- U.S. regulatory clarity and stock exchange plans underscore the growing contrast with Europe's slower progress.
EU risks falling behind US in tokenized markets, companies say
In a joint letter, several tokenization and market infrastructure companies are calling on policymakers to amend the EU's DLT pilot regime, a regulatory sandbox designed to test blockchain-based securities trading. Signatories include Securitize, 21X, Boerse Stuttgart Group, Lise, OpenBrick, STX and Axiology. The group says current asset thresholds, transaction caps and time-limited licenses prevent regulated platforms from achieving significant scale.
While businesses largely support the EU's market integration and supervision package, which aims to modernize capital markets, they say its benefits will materialize too slowly. Structural delays could push full implementation into the next decade. By then, companies warn, tokenized markets elsewhere may already be mature, leaving Europe struggling to remain competitive.
The letter highlights the growing pressure from the United States. According to industry participants, global liquidity naturally flows to jurisdictions with faster settlement and fewer structural barriers. Once this liquidity is migrated, getting it back can be difficult. This concern extends beyond market share to the role of the euro in global capital markets, as issuance and settlement increasingly migrate to digital infrastructures.
Industry calls for targeted reforms to the DLT Pilot to unlock growth in on-chain markets
Rather than calling for deregulation, the companies are proposing a targeted technical update to the DLT pilot regime. Investor protections would remain intact, but outdated limits would be adjusted. The group argues that such changes could be implemented quickly without reopening broader and complex market reforms.
Proposed updates include:
- Expand eligibility to tokenized financial assets.
- Increase issuance and transaction volume caps.
- Remove the six-year limit on pilot licenses.
- Maintain existing investor protection rules.
- Enable faster adoption via a standalone technical amendment.
According to the companies, these measures would allow regulated platforms to develop on a European scale rather than moving activity abroad. They warn that further delays risk weakening Europe's position as the on-chain settlement is becoming a standard feature of global finance.
SEC and exchanges give green light to tokenized markets under current rules
Developments in the United States underline the contrast. Last December, the SEC's Trading and Markets Division clarified how custodian brokers can custodian tokenized stocks and bonds under current customer protection rules, indicating that blockchain-based securities fall under traditional regulatory oversight.
The same day, a no-action letter issued to a subsidiary of the Depository Trust & Clearing Corporation paved the way for a new tokenization service. DTCC has confirmed that its Depository Trust Company unit has obtained approval to tokenize real-world assets already held in custody.
Additional guidance followed on January 28, when regulators defined two categories of tokenized securities: those issued directly by companies and those created by unaffiliated third parties. This clarification was intended to provide businesses with greater regulatory certainty as business expands.
Traditional stock markets are also progressing. In November 2025, Nasdaq stated that obtaining approval for tokenized stock listings was one of its top priorities. The New York Stock Exchange followed on January 17, announcing plans for a blockchain platform for trading tokenized stocks and ETFs, subject to regulatory approval. The proposed platform would offer near-instant settlement and 24-hour trading.
European companies say similar progress remains achievable at home — but only if short-term regulatory constraints are addressed before global dynamics shift permanently elsewhere.
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