Europe’s Blockchain Lead at Risk as U.S. Accelerates Tokenization Race

The battle to reshape global capital markets with blockchain technology is reaching a critical juncture — and European industry leaders are sounding the alarm that the continent’s early advantage could evaporate if policymakers don’t act swiftly.

In a strongly worded letter released Thursday, eight of Europe’s most prominent blockchain and digital asset firms have called for immediate reforms to the European Union’s Distributed Ledger Technology (DLT) Pilot Regime. The coalition — comprising Securitize, 21X, Seturion (from Boerse Stuttgart Group), Central Securities Depository, Lise, OpenBrick, STX, and Axiology — warns that Europe’s cautious regulatory approach risks ceding ground to an aggressive U.S. push that could establish American markets as the default infrastructure for tokenized finance.

“We find ourselves at a pivotal moment,” the firms wrote. “While Europe deliberates, the U.S. has already acted and is on track to own the digital rails of the future global economy.”

The stakes are enormous. Tokenization — the process of representing real-world assets like stocks, bonds, and funds as blockchain-based tokens — promises to revolutionize financial markets by dramatically accelerating settlement times, enhancing transparency, and enabling fractional ownership at unprecedented scale. Industry projections suggest tokenized assets could balloon to multiple trillions of dollars within the next few years, potentially reshaping the entire architecture of global finance.

Europe initially positioned itself as a pioneer in this space, introducing the DLT Pilot Regime as one of the world’s first legal frameworks specifically designed for tokenized financial infrastructure. However, the coalition argues that the regime’s built-in limitations — originally intended as prudent safeguards — have now become constraints that threaten to transform Europe’s lead into what they call a “success trap.”

Meanwhile, the United States is moving decisively. The Securities and Exchange Commission recently granted a no-action letter to the Depository Trust & Clearing Corporation (DTCC), America’s largest settlement firm, effectively clearing the path for full-scale tokenized settlement operations. Industry giants are mobilizing rapidly: Nasdaq has outlined plans for 24/7 tokenized stock trading, while the New York Stock Exchange is developing infrastructure for around-the-clock blockchain-powered securities trading. The Chicago Mercantile Exchange, a cornerstone of Wall Street derivatives trading, is collaborating with Google on tokenized cash collateral systems slated for launch later this year.

The implications are stark. The coalition warns that the United States could achieve T+0 (instant) settlement as early as 2026 — giving American markets a four-year head start before the EU’s broader Market Integration and Supervision Package (MISP) takes full effect in 2030.

“This is not merely about technological competitiveness,” the letter emphasizes. “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.”

To prevent this scenario, the firms are proposing specific, actionable reforms to the DLT Pilot Regime. Their recommendations include removing restrictions on which assets can be tokenized, dramatically increasing the transaction volume cap from its current €6-9 billion range to between €100-150 billion, and eliminating the six-year limitation on licenses that currently constrains long-term planning and investment.

The coalition frames these changes as essential not just for maintaining technological leadership, but for preserving the EU’s broader economic sovereignty. They argue that allowing the U.S. to establish dominance in tokenized financial infrastructure could have cascading effects on the euro’s global standing, potentially relegating Europe to a secondary position in the digital economy just as it did during previous waves of financial innovation.

“The EU must act now to avoid repeating the mistakes of its capital markets history,” the firms conclude, invoking a sense of urgency that reflects both the technical complexity and geopolitical significance of the moment.

As the tokenization race accelerates, the coming months will likely prove decisive. Will European policymakers heed the industry’s call for rapid reform, or will the continent’s traditionally cautious approach to financial innovation cost it the opportunity to shape the future of global markets? The answer could determine not just which region hosts the next generation of financial infrastructure, but which currency — the dollar or the euro — becomes the default for the tokenized economy of tomorrow.

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