The race to modernize capital markets with blockchain is heating up – and Europe could lose its lead to the United States, a group of blockchain companies warned in a letter published Thursday.
Eight EU-regulated digital asset companies – Securitize, 21X, Boerse Stuttgart Group’s Seturion, Central Securities Depository, Lise, OpenBrick, STX and Axiology – are urging policymakers to accelerate changes to the bloc’s distributed ledger technology pilot regime, saying current limitations are holding the region back just as the United States begins to act decisively.
“While Europe deliberates, the United States has already acted and is well on its way to owning the digital rails of the future global economy,” the companies said in the letter.
Tokenization refers to the process of issuing real-world assets such as stocks, bonds, or funds as blockchain-based tokens. Industry supporters see it as a way to significantly improve settlement speeds, increase transparency and unlock fractional ownership. This is a potentially huge market: several reports predict that tokenized assets could reach several billion dollars over the next few years.
The EU was among the first to introduce a legal framework for tokenized financial infrastructure, but its regulatory sandbox – the DLT pilot regime – was designed with cautious limits. The companies behind the letter say these limits now risk turning EU tokenization into a “success trap” as the US moves forward rapidly.
The United States Securities and Exchange Commission (SEC) recently granted a no-action letter to DTCC, the country’s largest settlement company, paving the way for large-scale token settlement. A T+0 (instant settlement) market could be operational in the United States as early as 2026, with exchange operators Nasdaq and the New York Stock Exchange having drawn up plans to trade tokenized securities 24 hours a day. CME Group, which operates a key derivatives trading platform for Wall Street firms, is collaborating with Google on a token cash collateral expected to launch later this year.
This would give the United States a four-year head start before the EU’s broader Market Integration and Supervision Package (MISP) takes full effect by 2030, the letter warns.
The group proposed changes to the framework to avoid this scenario. This includes removing restrictions on assets that can be tokenized, increasing the trading volume cap to €100 billion to €150 billion from the pilot’s €6-9 billion limit, and removing the six-year limitation on licenses.
“If Europe remains constrained until 2030, global liquidity will not wait: it will permanently migrate to US markets, also undermining the competitiveness of the euro through regulation rather than technology,” the letter said. “The EU must act now to avoid repeating the mistakes of its history on capital markets.”
