EU Firms Urge Faster Regulations as US Gains Ground in Tokenized Markets

• Why Are EU Firms Sounding the Alarm?
• How Could the US Outpace Europe?
• What Specific Reforms Are Proposed?
• What’s Happening in the US?
• Are Traditional Exports Joining the Movement?
• Key Questions Answered

European companies developing tokenized securities are pressing EU lawmakers to act swiftly, warning that outdated rules are stifling growth in regulated on-chain markets. Industry players argue that delays could divert capital and trading activity to the US, where tokenization is advancing under established frameworks. The calls come ahead of a parliamentary debate on Europe’s digital market infrastructure. Proposed updates to the EU’s DLT Pilot Regime aim to unlock scalability without deregulation, while US progress—including SEC clarity and exchange initiatives—highlights the growing transatlantic gap.

Why Are EU Firms Sounding the Alarm?

In a joint letter, key players like Securitize, 21X, and Boerse Stuttgart Group urged EU legislators to amend the DLT Pilot Regime, a sandbox for blockchain-based securities trading. They argue that current asset thresholds, transaction limits, and temporary licenses prevent regulated platforms from achieving meaningful scale. While supportive of the broader EU Market Integration and Supervision Package, the group warns its benefits may arrive too late—potentially delaying full implementation until the next decade. By then, tokenized markets elsewhere could mature, leaving Europe scrambling to compete.

How Could the US Outpace Europe?

The letter underscores mounting pressure from the US, where liquidity naturally flows toward jurisdictions offering faster settlement and fewer structural barriers. Once liquidity migrates, reclaiming it becomes notoriously difficult. The stakes extend beyond market share—the euro’s role in global capital markets is at risk as issuance and settlement increasingly shift to digital infrastructures. "It’s not just about catching up; it’s about preventing irreversible fragmentation," noted a BTCC market analyst.

What Specific Reforms Are Proposed?

Rather than deregulation, firms advocate targeted technical updates to the DLT Pilot Regime:

• Expanding eligibility for tokenized financial assets
• Increasing issuance and transaction volume caps
• Removing the six-year limit on pilot licenses
• Preserving existing investor protections

These changes could be implemented rapidly via standalone amendments, allowing platforms to scale across Europe without relocating activity abroad.

What’s Happening in the US?

Recent developments highlight the contrast. In December 2025, the SEC’s Trading and Markets Division clarified how brokers can custody tokenized stocks/bonds under existing rules, affirming blockchain securities’ place under traditional oversight. That same day, a no-action letter to DTCC’s subsidiary greenlit a new tokenization service for real-world assets in custody. By January 2026, regulators had defined two categories of tokenized securities—those issued directly by firms and those created by unaffiliated third parties—providing clearer guardrails.

Are Traditional Exports Joining the Movement?

Absolutely. Nasdaq prioritized tokenized equity listings in November 2025, and the NYSE followed in January 2026 with plans for a blockchain platform trading tokenized stocks/ETFs (pending approval). The proposed system WOULD enable near-instant settlements and 24/7 trading—features European firms argue are achievable domestically if regulatory constraints are addressed promptly.

Key Questions Answered

What’s the core issue facing EU tokenization?

Europe’s DLT Pilot Regime currently imposes restrictive limits on asset types, transaction volumes, and license durations, preventing regulated platforms from scaling effectively.

How does US progress impact Europe?

Clearer US regulations and exchange initiatives risk diverting liquidity and innovation away from EU markets, potentially marginalizing the euro in global finance.

Are firms asking for deregulation?

No—proposed reforms focus on updating technical parameters while maintaining investor protections, allowing faster adoption through targeted amendments.