EU's DLT Sandbox at Risk: 39 Firms Demand Fast-Track Rule Changes or Risk Losing to America

A coalition of 39 European financial powerhouses—including trading giant Nasdaq and stock exchange operator Boerse Stuttgart—is sounding the alarm. They're telling EU policymakers to break the DLT Pilot Regime out of a bloated legislative package and handle it separately, or Europe will hemorrhage crypto and tokenized finance talent to the US.

The Competitive Squeeze Is Real

The group fired off a joint letter to European Commission Financial Services Commissioner Maria Luis Albuquerque and EU Parliament members, making their case crystal clear: bundling the DLT Pilot Regime into the broader Market Integration and Supervision Package will trigger endless negotiations and kill Europe's edge in blockchain adoption.

"Negotiations are likely to be lengthy," the letter warned, with signatories arguing that delays "risk dampening Europe's momentum in DLT adoption." Translation: while Brussels debates, American crypto and tokenized asset platforms will capture the market share and liquidity that should belong to European firms.

What's at Stake with the DLT Pilot Regime?

For context, the DLT Pilot Regime is essentially Europe's regulatory sandbox for blockchain—launched in 2023 to let financial institutions test tokenized trading and settlement of traditional assets (stocks, bonds, investment funds) under real market conditions with temporary exemptions from standard rules. It's designed to accelerate innovation without blowing up the financial system.

But here's the problem: the current framework is strangled by limitations. Only relatively small financial products qualify for testing:

• •Company shares valued under $588 million
• •Bonds with issuance sizes below $1.17 billion
• •Investment funds with assets under $588 million

The 39-firm coalition is demanding pragmatic upgrades: expand eligible asset classes, raise the overall volume cap to 150 billion euros ($176 billion), eliminate time constraints on licenses, and remove arbitrary duration limits. These adjustments, they claim, "enjoy broad support among market participants across Europe."

The US Isn't Waiting Around

Meanwhile, American regulators are moving decisively. The SEC has clarified that broker-dealers can custody tokenized stocks and bonds under existing investor protection frameworks. The regulator even issued a no-action letter green-lighting a Depository Trust & Clearing Corporation subsidiary to launch services tokenizing real-world assets held in custody.

Translation: the US is already integrating tokenized securities into its operational infrastructure. Europe is still drafting paperwork.

This isn't the first warning shot. Back in February, nine European tokenization firms—including Securitize and Boerse Stuttgart Group—sent a separate letter demanding urgent DLT Pilot Regime updates. Without quick action, they cautioned, liquidity and market activity would migrate to the US, permanently weakening Europe's position in digital capital markets.