European groups urge EU to lift tokenized asset trading caps

The Association for the Development of Digital Assets and 27 partner organisations across Europe have called on European Union policymakers to authorise higher transaction volumes under the DLT Pilot Regime. In a press release issued on Tuesday, 8 September, the coalition requested that the European Commission’s Market Integration and Supervision Package remove or significantly raise the current limits. The groups argue that the proposed changes are insufficient to support the rapid evolution of global markets and the specific needs of the tokenized assets sector.

The DLT Pilot Regime establishes the legal framework for trading and settling transactions in crypto-assets that qualify as financial instruments under MiFID II. It also facilitates the creation of new market infrastructures, including distributed ledger technology multilateral trading facilities, settlement systems, and combined trading and settlement systems. According to the European Securities and Markets Authority, this regime was designed to develop the trading and settlement of tokenized securities and serve as a testing ground for blockchain technology in financial instruments. PYMNTS previously reported in April 2022 that the regime aimed to provide a structured environment for these innovations.

The European Commission has proposed increasing the ceiling from the current 6 billion euros, approximately 7 billion dollars, to 100 billion euros, or about 116 billion dollars. However, ADAN and its partners contend that this figure remains inadequate. In a letter to policymakers, the organisations stated that they represent both traditional finance and the emerging tokenized assets sector. They emphasised the need for Europe to act decisively to remain competitive in the global race to tokenize assets. The groups noted that while the proposed increase is a step forward, it fails to account for rapid market developments, particularly in the United States.

The letter highlighted that some existing European projects already hold volumes reaching 350 billion euros, roughly 406 billion dollars, with plans for further growth. The organisations argued that the current thresholds, which are based on market capitalisation rather than trading volume, would unnecessarily limit these projects. They described the proposed 100 billion euro cap as relatively modest in the context of global equity markets. Consequently, the coalition is urging EU legislators to deliver a regulatory framework that allows for significant scale within the DLT Pilot Regime. They have specifically requested the removal of the cap under the standard plan or the setting of thresholds high enough to accommodate market growth, alongside a flexible adjustment mechanism for future increases.