European regulators are being urged to move faster on blockchain market reforms as digital asset firms warn that the European Union risks falling behind the United States in the global race to tokenize capital markets.
In a joint letter sent to policymakers, eight EU regulated blockchain and digital asset firms cautioned that the bloc’s current approach to tokenization is becoming overly restrictive just as U.S. regulators and market operators push ahead with large scale implementation. The firms said Europe’s early leadership in regulated blockchain finance could quickly turn into a disadvantage if reforms are delayed.
The warning comes from companies including Securitize, 21X, Seturion of Boerse Stuttgart Group, Lise, OpenBrick, STX and Axiology. Together, they argue that the EU’s Distributed Ledger Technology Pilot Regime was designed with caution but is now constraining growth at a critical moment for global capital markets.
Tokenization involves issuing traditional financial instruments such as equities, bonds or funds as blockchain based tokens. Supporters say it can reduce settlement times, lower costs, increase transparency and enable fractional ownership. Industry forecasts suggest tokenized assets could grow into a multi trillion dollar market over the coming years.
While the EU was among the first major jurisdictions to establish a legal framework for tokenized market infrastructure, the pilot regime places strict limits on transaction volumes, eligible assets and the duration of licenses. According to the firms, these guardrails now risk turning Europe’s early progress into what they described as a regulatory success trap.
By contrast, momentum in the United States is accelerating. Regulators have recently cleared the way for large scale tokenized settlement through approvals involving DTCC, opening the door to instant settlement models as early as 2026. Major exchanges including Nasdaq and the New York Stock Exchange have outlined plans for tokenized securities trading with extended or continuous market hours. CME Group is also working with Google on tokenized cash collateral infrastructure.
The firms warned that these developments could give the U.S. a multi year head start before the EU’s broader Market Integration and Supervision Package takes full effect toward the end of the decade. In fast moving capital markets, they said, liquidity will follow operational efficiency rather than regulatory patience.
To prevent capital migration, the group called for immediate changes to the pilot regime. Their proposals include expanding the range of assets eligible for tokenization, raising transaction caps to as much as €150 billion and removing the current time limits on operating licenses.
If reforms are postponed until 2030, the firms cautioned, global capital markets may shift permanently toward U.S. infrastructure, weakening Europe’s competitiveness and the international role of the euro. The message to policymakers was clear that blockchain based finance is moving from experimentation to execution and that delay now could have lasting consequences for Europe’s financial system.
