The race to modernize capital markets with blockchain is heating up, and Europe could be squandering its early lead against the United States, a group of blockchain companies warned in a letter on Thursday.
Eight EU-regulated digital asset firms (Securitize, 21X, Boerse Stuttgart Group’s Seturion, Central Securities Depository, Lise, OpenBrick, STX and Axiology) are urging policymakers to accelerate changes to the bloc’s distributed ledger technology pilot regime, saying current limitations are holding the region back just as the United States begins to move decisively.
“While Europe deliberates, the United States has already acted and is on track to own the digital rails of the future global economy,” the companies said in the letter.
Tokenization refers to the process of issuing real-world assets, such as stocks, bonds, or funds, as blockchain-based tokens. Industry supporters see it as a way to dramatically improve settlement speed, increase transparency and unlock fractional ownership. It’s potentially a huge market: several reports project that tokenized assets could rise to several trillion dollars in the coming years.
The EU was one of the first to introduce a legal framework for tokenized financial infrastructure, but its regulatory sandbox, the DLT Pilot Regime, was designed with cautious limits. The companies behind the letter argue that those limits now risk turning the EU’s leadership on tokenization into a “success trap” while the United States moves forward rapidly.
The US Securities and Exchange Commission (SEC) recently granted a no-action letter to DTCC, the country’s largest settlement firm, paving the way for large-scale tokenized settlement. A T+0 (instant settlement) market could be active in the US as early as 2026, and exchange operators Nasdaq and the New York Stock Exchange have unveiled plans for round-the-clock trading in tokenized securities. CME Group, which operates a key derivatives trading venue for Wall Street firms, is collaborating with Google on a tokenized cash collateral that it plans to launch later this year.
That would give the United States a four-year head start before the EU’s broader Market Integration and Surveillance Package (MISP) comes into full force by 2030, the letter warned.
The group proposed changes to the framework to avoid this scenario. That includes removing restrictions on which assets can be tokenized, increasing the transaction volume limit from the pilot’s €6 billion to €9 billion to €100 billion and €150 billion, and removing the six-year limitation on licenses.
“If Europe remains constrained until 2030, global liquidity will not wait: it will permanently migrate to US markets, also undermining the competitiveness of the euro through regulation rather than technology,” the letter said. “The EU must act now to avoid repeating the mistakes of its history in the capital markets.”
