Guest view: EU tokenisation drive depends on scale

By Verena RossTokenisation is moving from the margins to the mainstream of finance. Digital versions of shares, bonds and currencies which can be tracked and traded online are gaining traction. They have the potential to make financial markets more efficient, transparent, cost-effective, and accessible. A recent European Central Bank analysis reveals that the market capitalisation of tokenised assets on public blockchains grew from €7.4 billion at the start of 2024 to €38 billion in February 2026. And that is only the beginning.Europe must create the conditions for tokenised markets to operate safely and at scale across borders, with legal certainty, interoperable infrastructures and appropriate supervision. Over time, a common European Union framework – let’s call it DLT28 – could help prevent fragmentation and support an integrated European market for tokenised securities.As tokenisation develops, we also need to maintain investor protection and strengthen cyber resilience, which are critical to building trust in these new market structures.Other jurisdictions are already moving. The United Kingdom has created a pathway for firms to progress from sandbox testing to live activity, and potentially a permanent regime if the Treasury implements a statutory instrument. In the United States, the Securities and Exchange Commission has provided targeted regulatory relief that could enable on-chain trading of tokenised securities under the so-called innovation exemption.The EU has also laid its own valuable foundation for tokenisation. Since 2023, the Distributed Ledger Technology (DLT) Pilot, the EU’s sandbox regime for tokenised trading and settlement, has allowed market participants – and regulators – to test business models using the technology in a controlled environment.As of July 2026, this pilot had authorised six DLT market infrastructures. Together they have issued tokenised assets valued at €546 million. Growing interest suggests the regime continues to provide value as a stepping stone to wider market adoption.Yet take up is constrained by restrictions on the eligible assets and the limited scale at which market infrastructures may operate under the DLT Pilot.Some of the restrictions on scale and scope will be addressed by the European Commission’s initiative to create more integrated, efficient, and competitive EU capital markets under the Market Integration and Supervision Package (MISP). But much remains to be done.Three conditions are at the heart of increased adoption of tokenised assets: interoperability, secure on-chain cash settlement arrangements and legal certainty.As with any other market, a prerequisite for tokenisation is scale. To achieve this, we first need to lay the foundation for connectivity among market DLTs, free flow of liquidity and compatible standards. This should ensure interoperability not just between different DLT systems, but also between digital and traditional market infrastructures.The next priority is safe and efficient tokenised money. The Pontes Initiative, launched by the European Central Bank in September, is connecting DLT platforms to settlement in central bank money, providing a key building block in this direction.The European Securities and Markets Authority supports the coexistence of multiple options for settling transactions. Central bank money, commercial bank deposits – including tokenised deposits – and MiCA-regulated single-currency stablecoins, known as e-money tokens. These alternatives can serve different uses, with safeguards tailored to their respective risks.Finally, we need to achieve legal certainty for investors. They must know what they own, how they can transfer their assets, and how their rights will be upheld.That certainty must underpin both routes to expanding the market for tokenised assets: either by bringing some of the €80 trillion in existing securities onto DLT infrastructures or by issuing new securities directly on DLT. Europe should enable both, wherever issuers, market players and investors see a benefit.The MISP proposal, including amendments to the existing legal framework for market infrastructures enabling the use of DLT, provides an important part of that legal certainty at the EU level. But this is not enough when national corporate and property laws still differ over which securities can be issued or recorded on DLT, who may maintain the register, and whether a parallel “traditional” record is required.Without a common European framework tokenisation may develop through separate national solutions, repeating the fragmentation that afflicts the EU’s traditional financial markets and preventing the emergence of a truly integrated and scalable EU tokenised market.A pan-EU regime in which firms could choose to participate, would offer the possibility for a coherent legal basis for the issuance and transfer of tokenised instruments across the European Single Market. Such a regime would also need a supervisory approach that promotes convergence and avoids recreating national silos.Technological solutions are just a part of the equation in the future structure of European capital markets. The adoption of tokenisation will depend on business proposals and market demand, but also on policymakers removing barriers and supporting interoperability and market integration. While the DLT Pilot remains a valuable tool for regulatory testing, Europe requires more.Achieving an integrated and scalable tokenised market will require the public and private sector to develop the necessary foundations together. ESMA stands ready to play its part.CONTEXT NEWSVerena Ross is chair of the European Securities and Markets Authority.