A coalition of 39 European financial institutions and industry bodies, including Nasdaq and Boerse Stuttgart, has issued an urgent joint letter to the European Commission and Parliament, calling for immediate revisions to the EU's Distributed Ledger Technology (DLT) Pilot Regime. The group warns that folding the regime into the broader Markets in Crypto-Assets (MiCA) legislative package could cause lengthy delays, risking Europe's competitive position in the rapidly growing tokenized finance sector as the United States advances.
The DLT Pilot Regime, launched in 2023, acts as a regulatory sandbox, allowing financial firms to test blockchain-based trading and settlement of assets like stocks and bonds under real market conditions with temporary exemptions from certain rules. The signatories argue that the current framework is too restrictive, with limits that hinder scaling. They are pushing for specific changes: expanding the range of eligible assets, raising the overall volume cap to 150 billion euros ($176 billion), and removing time limits on licenses.
"Negotiations are likely to be lengthy," the letter addressed to Financial Services Commissioner Maria Luis Albuquerque states, adding that delays "risk dampening Europe’s momentum in DLT adoption." The group contends that these "pragmatic adjustments enjoy broad support among market participants across Europe."
The letter highlights a growing competitive threat from the United States, where regulators like the Securities and Exchange Commission (SEC) have moved to integrate tokenized securities into the existing financial system. The SEC has clarified that broker-dealers can custody tokenized stocks and bonds under current rules and issued a no-action letter enabling a Depository Trust & Clearing Corporation subsidiary to launch a tokenization service for real-world assets.
This call to action follows a similar plea in February from a group of nine European tokenization firms, including Securitize and 21X, which also warned that strict asset limits and time-bound licenses could cause liquidity and market activity to shift to the US, weakening Europe's position in digital capital markets.
