European Firms Urge EU to Expedite Blockchain Rule Changes

A coalition of European financial entities and industry organizations has called on European Union officials and lawmakers to accelerate modifications to blockchain regulations, cautioning that the region risks lagging behind the United States in tokenized finance. According to Cointelegraph, the appeal was made in a joint letter on Tuesday, signed by 39 parties, including Nasdaq and Boerse Stuttgart. The letter urged the European Commission and Parliament to separate the DLT Pilot Regime from a broader legislative package and review it as an independent law, as shared by crypto association Adan. The group contends that integrating the regime into the larger Market Integration and Supervision Package could postpone essential reforms needed to keep up with global advancements. The letter, addressed to Financial Services Commissioner Maria Luis Albuquerque, highlighted that negotiations are likely to be prolonged, potentially hindering Europe's progress in adopting distributed ledger technology (DLT). The DLT Pilot Regime, launched in 2023, provides an EU framework allowing financial firms to test blockchain-based trading and settlement of assets like stocks and bonds under real market conditions. It serves as a regulatory sandbox, offering temporary exemptions from certain rules to enable experimentation with tokenized finance. The coalition is advocating for several amendments to the current pilot regime, such as broadening the range of eligible assets, increasing the overall volume cap to 150 billion euros ($176 billion), and removing time constraints on licenses. The letter asserts that these pragmatic adjustments have widespread support among market participants across Europe. Presently, only relatively small financial products can be tested on blockchain systems, including shares from companies valued under $588 million, bonds with issuance sizes below $1.17 billion, and investment funds with assets under $588 million. Meanwhile, the United States has progressed in integrating tokenized securities into its existing financial system. The Securities and Exchange Commission (SEC) has clarified that broker-dealers can custody tokenized stocks and bonds under current investor protection rules. Additionally, the regulator has issued a no-action letter allowing a Depository Trust & Clearing Corporation subsidiary to launch a service that tokenizes real-world assets held in custody. Cointelegraph reached out to Nasdaq and Boerse Stuttgart for comment but had not received a response by publication. In February, a group of European tokenization and market infrastructure firms also urged EU policymakers to promptly update the DLT Pilot Regime, warning that strict asset limits, low issuance caps, and time-bound licenses are impeding the scaling of regulated on-chain markets. In a joint letter, nine companies, including Securitize, 21X, and Boerse Stuttgart Group, argued that without a swift resolution to the pilot regime, liquidity and market activity could migrate to the US, undermining Europe's standing in digital capital markets.