A consortium of European tokenization companies has spoken out against the Distributed Ledger Technology (DLT) Pilot Regime. Among the problems they raised are the scope of the measures, the numerous limitations it imposes, the low investment it generates, and its uncertain future projections. Meanwhile, they risk losing market leadership to a rapidly advancing US ecosystem.
Nine tokenization companies have once again voiced their opposition to the European Union’s DLT Pilot Regime. These concerns are not new, having been initially raised in July 2023 without any resolution being reached. According to the companies, this regime continues to limit the development of tokenized markets at a commercial scale within the bloc.
The first critical point they raised is the restriction on asset eligibility. The limited list of financial instruments permitted under the current regime reduces the variety of products that can be tokenized, which in turn limits the depth and attractiveness of the market for issuers and institutional investors.
Added to this is the issue of volume limits, considered too low for significant adoption. The current caps, which range between €6 billion and €9 billion in transactions, are seen as insufficient to build liquid markets. The companies propose raising these limits to a range of €100 billion to €150 billion, a level that would allow for sustainable and competitive operations.
Finally, the companies argue that the licenses are too restrictive for future market planning. With a duration of only six years, this limitation introduces regulatory uncertainty that discourages long-term capital commitments, which are necessary to deploy infrastructure, attract talent, and sustain ongoing investments in research and development.
Strong rejection of the pilot program and clear US advantage in the crypto ecosystem
In contrast, the companies compare the European approach with recent regulatory advancements in the United States. Clearer pathways have been established for the issuance, custody, and settlement of tokenized securities, supported by explicit signals of support from regulators and market infrastructure players.
A key point in this regard is the issuance of a non-action letter to the Depository Trust Company, which facilitated the provision of tokenization-related services within the US regulatory framework. For companies, these types of measures give the US a tangible advantage in the race to lead the digital asset ecosystem.
Industry representatives emphasize that their proposals do not seek to weaken investor protections, but rather to introduce technical adjustments that would allow the model to scale.
In this context, they warn that broader reforms to the Market Infrastructure Regulation (MIR), which could address some of these limitations, would not have a real impact before 2030. For policymakers, the immediate choice is clear: modify the DLT Pilot Regime to enable growth or risk a sustained migration of capital and liquidity to the United States before the necessary structural changes are implemented.
