From Pymnts · PYMNTS · · 1m 30s
Europe's tokenization cap is too small
Twenty-eight financial groups say the EU's proposed 100 billion euro ceiling already looks tiny next to real projects.
In brief
Twenty-eight financial groups say the EU's proposed 100 billion euro ceiling already looks tiny next to real projects. The DLT Pilot Regime's cap is measured against market capitalization, so a 100 billion euro ceiling boxes in European projects that are already three times bigger. Originally reported by Pymnts.
Twenty-eight groups, one ask
ADAN and 27 partner organizations across Europe wrote to EU policymakers on Sept. 8, asking them to allow far higher transaction volumes under the DLT Pilot Regime.
What the pilot regime does
It is the legal framework for trading and settling crypto-assets that count as financial instruments under MiFID II, and it lets new DLT trading and settlement venues exist at all.
A sandbox from 2022
The regime was built as a testing ground for blockchain in financial instruments, aimed at developing the trading and settlement of tokenized securities.
6 billion to 100 billion
The European Commission has proposed lifting the ceiling from 6 billion euros to 100 billion euros, roughly $7 billion to $116 billion. The signatories call that a step forward, and still not enough.
Projects already outgrew it
Some existing European projects hold volumes reaching 350 billion euros, about $406 billion, and plan to grow further. The new cap would cut them off before they start.
“In practice, this would unnecessarily limit European projects.”
Remove the cap or float it
The groups want the ceiling scrapped, or set high with a flexible mechanism to raise it and no differentiated thresholds. Their warning: the cap counts market cap, not trading volume.
“While [100 billion euros] may seem a substantial figure, it is relatively modest in the context of global equity markets.”
The short version
The DLT Pilot Regime's cap is measured against market capitalization, so a 100 billion euro ceiling boxes in European projects that are already three times bigger.
