European token exchanges warn the EU its reform timetable risks Europe being overtaken by the United States

• A group of digital asset exchanges and one CSD have warned European institutions their blockchain reforms are too slow to compete with the US

• With reforms not scheduled for implementation until 2030, the group suggests a mini package of liberalising measures within the DLT Pilot Regime sandbox now

• The proposed “quick fix” reforms will allow DLT Pilot Regime licence holders to tokenise any asset and grow faster for longer before being fully regulated

A group of digital asset exchanges and a central securities depository (CSD) based in Europe have written to the European Commission, the European Parliament and the European Council to say that the timetable for reforming European capital markets laws and regulations to accommodate digital assets issued, traded and settled on blockchains is too slow.

“In a digital market defined by speed, timing is the only variable that matters,” they write. “The EU risks losing market relevance.”

This last phrase is a clever play on the words used by Maria Luís Albuquerque, the European Commissioner for Financial Services and the Savings and Investments Union, at the launch of the Market Integration and Supervision Package (MISP) of reforms in Brussels on 4 December 2025.

“Market integration is not a technical exercise,” she said. “It is a political imperative for Europe’s prosperity and global relevance.”

Unfortunately, say the authors of the letter, the Commission has given itself until 2030 to implement MISP. They do not mince their words. They describe the leisurely timetable as a form of “structural inertia” that creates “a critical strategic vulnerability.”

By this they mean the risk of being overtaken by the United States, where the Trump administration has reversed the cautious approach of the Biden administration. It has liberalised Stablecoin issuance, empowered the American CSD (the Depository Trust and Clearing Corporation, or DTCC) to tokenise Russell 1000 equities, Exchange Traded Funds (ETFs) tracking major indices and U.S. government Treasury bills, bonds and notes.

“This creates a four-year window for regulatory arbitrage,” note the authors of the letter. “If Europe remains constrained until 2030, global liquidity will not wait - it will migrate permanently to U.S. markets, undermining also the euro’s competitiveness through regulation rather than technology. The EU must act now to avoid repeating the mistakes of its capital markets history.”

They propose bringing forward some of the adjustments itemised in the MISP, which they believe can be adopted quickly without damaging investor protection.

So what is the MISP?

It is a collection of measures unveiled by the European Commission on 4 December 2025 whose aim is to accelerate the Savings and Investments Union (SIU), the re-branded Capital Markets Union (CMU) launched more than decade ago (in 2015) that has struggled ever since to speed up the integration of European capital markets.

The MISP attracted interest in the digital assets industry because it liberalised the DLT Pilot Regime.

This regulatory sandbox, opened by the European Securities and Markets Authority (ESMA) on 23 March 2023, aimed to encourage the development of blockchain-based trading and settlement systems by offering DLT multilateral trading facility (DLT MTF), DLT settlement system (DLT SS) and DLT trading and settlement system (DLT TSS) licences.

It was not a success. Nearly three years on, ESMA has authorised just four blockchain-based trading and settlement systems (21X in Germany, Axiology in Lithuania, Lightning Stock Exchange (Lise) in France and Securitize Europe Brokerage and Markets in Spain) one blockchain-based multi-lateral trading platform (360X in Germany) and one blockchain-based settlement system (CSD Prague in the Czech Republic).

By contrast, the Digital Securities Sandbox (DSS) opened by the Bank of England and the Financial Conduct Authority (FCA) in the United Kingdom had welcomed 16 firms, including several household names, within 16 months of opening on 30 September 2024.

The signatories to today’s letter include five participants in the DLT Pilot Regime – Axiology, 21X, CSD Prague, Lise and Securitize - that are well-aware of its limitations, and especially the low caps on the size of the businesses that can take part. They are joined by three Spanish token exchanges, STX, OpenBrick and Token City, and Börse Stuttgart, which recently launched Seturion, a pan-European, blockchain-based settlement platform for tokenised assets.

Ironically, the signatories of the letter like what they see in MISP. It will expand the scope of the DLT Pilot Regime from shares, bonds and UCITS funds only to include all financial instruments.

Existing asset-specific caps on equities (currently up to €500 million), bonds (€1 billion, unless the issuer has a market capitalisation of less than €200 million, in which case there is no cap) and UCITS funds (€500 million) will be lifted.

The aggregate value of all blockchain-based financial instruments admitted to trading or recorded on a TSS or SS or MTF will rise from €6 billion to €100 billion. Current permission time limits of up to six years will be removed. Smaller blockchain-based infrastructures servicing instruments worth up to €10 billion will enjoy a simpler regime.

Crypto-Asset Service Providers (CASPs) authorised under the Markets in Crypto-Assets Regulation (MiCAR) will be supervised at EU level by ESMA, instead of at the member-state level.

CASPS operating a crypto asset trading platform under MiCAR will also become eligible to operate a “DLT trading venue” (DLT TV) and a DLT trading and settlement system (DLT TSS), effectively enabling investment trading firms to combine with CSDs.

There will be an option for holders of DLT MTF, DLT SS and DLT TSS licences  to apply for exemptions from regulatory provisions in the Markets in Financial Instruments Directive II (MiFID II), the Markets in Financial Instruments Regulation (MiFIR) and the Central Securities Depositories Regulation (CSDR) where these obstruct adoption of blockchain technology.

One objective is clearly to break the CSD monopoly of registration and central bank money settlement. The existing definitions of ‘book-entry’, ‘cash’ and ‘securities accounts’ will be amended to accommodate blockchain technology and definitions of ‘distributed ledger technology’ and ‘e-money token’ will be added.

Certain “e-money tokens” authorised under MiCAR - for which, read Stablecoins – will become available to settle the cash leg of securities transactions.

Entities that provide post-trade services will be required to establish technical standards that support interoperability between blockchain market infrastructures.

Importantly, MISP will also replace the existing Settlement Finality Directive with a new Settlement Finality Regulation (SFR), which will also amend the Financial Collateral Directive.

This is necessary because the existing Settlement Finality Directive (which came into force in 1998) and the Financial Collateral Directive (which came into force in 2003) did not envisage blockchain technology.

The MISP reforms will bring settlement finality (the point at which the settlement of a transaction becomes irrevocable) into line with blockchain conceptions of finality, which include consensus mechanisms based on “layered” or “probabilistic” finality. Blockchains will be able to “implement mechanisms guaranteeing deterministic and legally enforceable finality moments."

On the collateral side, the MISP reforms will bring collateral transactions that cross national borders into the scope of settlement finality as well as embracing new market institutions (such as Stablecoin issuers) and instruments (such as carbon credits). Collateral has become a significant avenue of growth for tokenisation.

While the signatories of the letter recognise that they cannot achieve all these reforms quickly, they propose that some are brought forward as a “quick fix” by a handful of technical adjustments to the DLT Pilot Regime that can be included in a small piece of legislation.

They suggest expanding its scope to include all financial instruments, increasing the aggregate value threshold from €6 billion to €100 - 150 billion (still only one hundredth of the value of the European equity markets) and removing the six-year limit on DLT Pilot Regime licences.

“We respectfully and urgently call upon you not to allow the DLT Pilot Regime to be remembered as a `success trap’ - a well-designed experiment ultimately curtailed by legislative delay,” the signatories write. “But instead to preserve the EU’s relevance and, not least, the international standing of the euro. A timely solution is therefore essential. We strongly encourage you to adopt this quick fix.”