27 firms and associations Urge EU To Rethink €100bn DLT Cap
Axiology together with a coalition of twenty six European market infrastructure firms and associations are urging EU policymakers to raise proposed limits on tokenized securities, warning that the current plans could constrain the market just as it begins to scale.
In a letter to members of the European Parliament and Council, the group argues that the European Commission’s (EC’s) proposal to increase the Distributed Ledger Technology (DLT) Pilot Regime cap from €6 billion ($7bn) to as much as €100 billion still does not provide enough room for large-scale adoption.
Its preferred option is to remove the overall cap under the regular regime. If policymakers retain a threshold, the signatories say €1.5 trillion should be the baseline, alongside a mechanism allowing the EC to raise it as markets develop.
“Fixed ceilings would reduce regulatory certainty for market participants making long-term investment decisions. Players require confidence that the regulatory framework will remain capable of accommodating future growth and evolving market conditions. If the [EC’s] ability to adjust the thresholds is itself constrained by arbitrary numerical limits, market participants may reasonably anticipate that the framework could become obsolete with no possibility for timely regulatory action,” according to the letter.
There’s also a warning against applying lower thresholds to DLT market infrastructures than to incumbent central securities depositories, arguing this could put newer providers at a competitive disadvantage.
Marius Jurgilas, CEO of Axiology, said in a statement: “Europe has spent years building a regulated framework for tokenized capital markets, but the next test is whether those markets will be allowed to scale. A €100 billion ceiling may look generous on paper, but for market infrastructure it could quickly become a brake on investment and scale. The EU now has an opportunity to give regulated DLT markets the headroom to compete globally, while making sure new entrants are playing by the same rules as incumbent infrastructure.” Read the full letter here.
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