EU at Risk of Falling Behind the U.S. in Tokenization Rules, Digital Asset Firms Warn

Why It Matters

The EU’s regulatory lag could divert trillions of dollars in tokenized assets to the U.S., reshaping global liquidity and undermining Europe’s financial market relevance.

Key Takeaways

• EU pilot regime caps at €9 billion limit.
• U.S. SEC cleared DTCC for full tokenized settlement.
• Proposed EU cap increase to €150 billion.
• Instant T+0 settlement could launch in U.S. 2026.
• Liquidity may shift to U.S., hurting euro competitiveness.

Pulse Analysis

Europe once led the charge on blockchain‑based tokenization, introducing the DLT Pilot Regime to test distributed‑ledger securities. However, the sandbox’s conservative design—capping transaction volumes at €6‑9 billion and restricting asset classes—now appears misaligned with market momentum. Industry participants argue that these limits create a “success trap,” where early adopters are stifled while competitors abroad accelerate. The regulatory gap is especially stark as the United States, through the SEC’s no‑action letter to DTCC, clears the path for full‑scale tokenized settlement and T+0 trading, positioning U.S. exchanges for a near‑term advantage.

In the United States, major market operators are moving quickly. Nasdaq and the New York Stock Exchange have filed proposals for 24/7 tokenized trading, and CME Group is partnering with Google to develop a tokenized cash‑collateral system. If these initiatives materialize by 2026, the U.S. will enjoy a four‑year head start before the EU’s broader Market Integration and Supervision Package takes effect in 2030. This timeline could translate into billions of dollars of liquidity, fractional ownership opportunities, and faster settlement moving permanently to U.S. platforms, reshaping the global capital‑market landscape.

For European policymakers, the stakes are high. The letter from Securitize, 21X, Seturion, CSD, Lise, OpenBrick, STX and Axiology urges immediate reforms: lifting the €6‑9 billion cap to €100‑150 billion, removing asset‑type restrictions, and eliminating the six‑year licence limit. Such changes would restore Europe’s competitive edge, keep tokenized asset flows within the eurozone, and signal that the EU can adapt its regulatory framework to emerging fintech realities. Failure to act risks not only a loss of market share but also a broader erosion of the euro’s standing in the digital economy.