A catalyst for a new market of tokenized financial instruments
Article by Alireza Siadat, published in Börsen-Zeitung on 16 December 2025
Optimism in the U.S. digital asset market, coupled with the relaxation of the Digital Ledger Technology Pilot Regime (DLT), will revolutionize securities trading.
In Germany, the issuance of tokenized financial instruments has gained momentum in recent years, thanks in part to the Electronic Securities Act (eWpG). This legislation has provided issuers and investors in Germany with the necessary legal certainty. However, the reality is that this does not solve the problem of the lack of a secondary market for crypto securities. Additionally, there is no legal framework for the European Economic Area.
Market participants have been waiting for decisive regulatory action that would enable the creation of an internationally functioning, liquid trading venue. Until now, the necessary players have been lacking, particularly market makers and liquidity providers, who will only come on board if the market is sufficiently attractive and scalable.
Investor protection, market integrity, and financial stability must be ensured.
This is precisely where the EU's pilot regime for digital ledger technology (DLT) market infrastructures comes in. Since March 2023, EU Regulation 2022/858 has been in force, creating a "regulatory sandbox," or a space supervised by financial regulators in which innovative financial products can be tested in a less regulated environment. The aim is to test the development of DLT-based financial instruments under as realistic conditions as possible while ensuring a high level of investor protection, market integrity, and financial stability.
There are growing opportunities for a liquid secondary market.
The European Commission's proposals to revise the DLT pilot regime provide the market with the relief it needs. The proposed adjustments could make the pilot regime a game changer.
The substantial increase in thresholds is of particular significance. For example, the upper limit for the total value of eligible DLT financial instruments will increase from €6 billion to €100 billion. This opens the regime up to much larger market participants who were previously hesitant due to volume restrictions. It will also enable DLT projects to be scaled to a volume that appeals to institutional investors and large issuers, thus providing a basis for liquidity.
Other restrictions are also to be lifted.
Other restrictions, such as limiting tokenized shares to issuers with a market capitalization of no more than €500 million, will also be lifted. Additionally, all MiFID II financial instruments and their derivatives will be eligible for trading under the pilot regime.
This removes a key obstacle to diversification. Including all types of securities creates the necessary diversity of products to attract a broader range of investors and enable different investment strategies. This is an essential prerequisite for generating liquidity.
The current adjustments address concerns previously expressed by market participants. By doing so, they establish the critical mass of trading volume and product diversity necessary to attract liquidity providers, issuers, and investors.
The global race is on!
The global race for the most efficient capital market infrastructure is already in full swing. In the US, for example, the handling of tokenized assets has been made easier for financial institutions, signaling that the future of trading venues will be based on DLT. Acting SEC Chairman Paul Atkins sees DLT-based modernization as a necessary next step toward increasing efficiency and legal certainty. Thus, the US is taking a similar path to Europe. Tokenization and DLT will likely change not only trading but also the entire relationship between issuers and investors.
The expansion of DLT-based trading venues is imminent.
In light of these developments, the future of digital financial markets is becoming clearer. The convergence of mature technology, regulatory clarity in Europe and North America, and strong institutional engagement makes the scaling of DLT-based trading venues imminent. The question is no longer if real assets will be tokenized on a large scale, but when and how DLT will become an integral part of global markets.
As early as next year, all securities could be traded and settled on DLT. This would lead to significant operational efficiencies, shorter settlement cycles (such as T+0), reduced counterparty risk, and cost savings.
Now is the time to take advantage of the regulatory framework and adapt the German capital market to the digital age to remain globally competitive.
