The European Alliance of Tokenize Companies is urging the EU to quickly ease regulations on the DLT pilot program, warning that financial infrastructure could fall behind as the US accelerates modernization.
A coalition of major Tokenize and financial infrastructure companies in Europe is calling on the European Union to urgently update its rules for the blockchain market. The companies, including Securitize, 21X, Boerse Stuttgart Group, Lise, OpenBrick, STX , and Axiology, sent a joint letter to EU policymakers, arguing that the current stringent limitations of the DLT Pilot Regime are stifling innovation and hindering the ability to build large-scale Tokenize financial markets.
The letter, coordinated ahead of a debate in the European Parliament, calls for targeted reforms to the DLT Pilot Regime, a test framework for blockchain-based securities trading and clearing. The companies warn that delays in improving the rules could have serious consequences, while the EU's Market Integration and Supervision Package may not take full effect until around 2030.
Propose specific technical adjustments.
The companies emphasized that they were not seeking to undermine investor protection mechanisms, but rather were proposing specific technical changes. These reforms included expanding the asset classes that can be Tokenize, raising current limits on the total issuance size, and abolishing the six-year expiration period for pilot licenses.
The group argues that these reforms can be implemented quickly through a focused technical update, without the need to reopen or delay broader EU financial reforms.
Companies argue that these changes will strengthen the euro's position in global finance. Blockchain-based systems allow for near-instantaneous transaction clearing, in contrast to traditional systems which can take days.
Faster clearing reduces risk and improves efficiency, thereby increasing the market's attractiveness to investors. Without these improvements, Europe's financial infrastructure might remain slower and less competitive than markets that have transitioned to fully digital systems.
While Europe is grappling with regulation, the U.S. has taken steps to encourage Tokenize securities within existing regulatory frameworks. The U.S. has recommended regulatory requirements for securities brokerage firms regarding the maintenance of asset-backed securities and holdings of Tokenize securities such as stocks and bonds, while also adhering to rules protecting customers.
On December 11, the SEC issued a no-action letter to a subsidiary of Depository Trust & Clearing Corporation, allowing deposited physical assets to be converted into blockchain-based Token , modernizing the market infrastructure. Then, on January 28, the SEC clarified two types of Tokenize securities, including Token issued by the organization itself and Token issued by third-party companies, helping businesses operate legally and reducing uncertainty.
The largest US stock exchanges have also considered Tokenize. Nasdaq has stated that obtaining regulatory approval to list Tokenize shares is one of its priorities. The New York Stock Exchange is developing a blockchain-enabled trading system that could allow Tokenize shares and Exchange Traded Fund) to be traded around the clock.
European Tokenize companies argue that the EU is still well-positioned to lead in financial innovation if it acts quickly. They say Tokenize is expected to transform Capital markets for the better, speeding up transactions, increasing transparency and efficiency. However, they warn that financial markets are changing too rapidly, causing global liquidation to often shift toward the systems that are most suitable.
