EU Regulator Warns: Europe Must Accelerate Tokenization Adoption to Compete Globally

Brussels sounds the alarm—Europe's falling behind in the tokenization race.

The Warning Shot

European financial regulators just dropped a reality check: the bloc risks becoming irrelevant in the rapidly evolving world of asset tokenization. While Asia and the US charge ahead with blockchain-based securities, real estate tokens, and digital bonds, EU bureaucracy moves at—well—EU speed.

Global Pace vs. Red Tape

Other major economies aren't waiting. They're building regulatory frameworks that attract innovation rather than stifle it. Tokenization isn't some futuristic fantasy—it's happening now, transforming how institutions manage liquidity, settlement, and ownership. And Europe? Still debating which committee should form a subcommittee to draft preliminary guidelines.

The Cost of Falling Behind

Delays mean losing financial influence, capital flight, and missed opportunities in a multi-trillion-dollar market. Traditional finance giants are already tokenizing assets elsewhere—because they can. Meanwhile, EU investors watch from the sidelines, stuck in a system that still thinks fax machines are cutting-edge.

Time to Wake Up

The message is clear: adapt or get left behind. Tokenization cuts middlemen, reduces costs, and unlocks liquidity—everything finance claims to love, unless it disrupts their comfortable fee structures. Maybe that's the real resistance—bankers protecting their spread.

ESMA seeks real-time oversight

The tokenized assets space has already seen an explosion of initiatives aimed at bringing assets to the blockchain, and ESMA believes the EU can tap into the Markets in Crypto-Assets Regulation to protect investors as well as keep pace with the U.S. and U.K., among other jurisdictions.

Commenting on the asset tokenization trend, the ESMA exec noted:

With crypto platforms like Coinbase and Kraken, and broker Robinhood, at the forefront of tokenization with tokenized stocks, and asset managers like BlackRock and Fidelity already big players, the nascent market, which sits around $600 billion, is forecast to see exponential growth. Government adoption is also on the rise.

The EU market represented more than 50% of the tokenized fixed-income instruments that launched onchain in 2024, Cazenave pointed out.

While the EU looks to scale tokenization, it is important regulators and other players MOVE in tandem with the U.K. and U.S., the latter working on a roadmap recommended by the President’s Working Group on Digital Assets.

But with tokenized assets relying on the same underlying technology, EU regulators already have an “understanding of the risks and legal uncertainties.” Policymakers can capitalize on this knowledge to keep pace with other tier-one regulatory jurisdictions.

“Given the speed at which the market is expected to grow it will be important to keep pace and agree swiftly on the way forward,” she noted.