Spain Says Europe’s Digital Asset Rules May Be Too Restrictive

• Spain’s securities commission president decries the EU’s restrictive DLT framework.
• Carlos San Basilio suggests increasing or removing the DLT market cap ceiling.
• The European Commission has proposed increasing the ceiling to €100 billion.

Spain’s National Securities Market Commission (CNMV) president, Carlos San Basilio, thinks the EU’s regulation on distributed ledger technology (DLT) is restrictive. According to Basilio, the current EU DLT regulatory ecosystem focuses more on testing than on growth.

Basilio made the statement while speaking at the 9th edition of the ‘Digital Assets’ Forum organized by ‘El Confidencial’. He noted that DLT use in the region is marginal, citing only five firms registered under the current EU DLT system, one of them being Spanish. Basilio further noted that the EU’s regulatory framework caps the total market value of tokenized instruments on a DLT platform at €6 billion, compared with the €1.7 trillion market capitalization of the Spanish stock exchange.

The EU DLT Pilot Regime

The conditions that Basilio cited fall under the EU DLT Pilot Regime, a regulatory sandbox that allows financial institutions to trade and settle tokenised financial instruments using Distributed Ledger Technology (DLT). The protocol has been active since March 2023 to regulate participants in the EU DLT ecosystem. Under the pilot regime, operators can request temporary exemptions from traditional EU financial regulations, such as MiFID II and CSDR, that would otherwise block the use of blockchain in capital markets.

Basilio suggested an adjustment to the current framework guiding the EU DLT Pilot Regime. He focused on raising or removing the current €6 billion market cap ceiling, which the broader industry views as the single most critical catalyst needed to unlock investment in tokenized securities. 

What if the Cap Ceiling is Raised or Removed Completely?

Removing the market cap ceiling will allow large financial institutions to issue or trade liquid, large-cap equities or benchmark bonds, which they cannot do under the current framework. It will allow institutions to justify spending millions to integrate blockchain infrastructure if arbitrary volume caps threaten to make the platform obsolete whenever an asset appreciates. Removing or raising the cap ceiling will also give institutional portfolios more room to operate, since the cap tracks total asset value rather than trading volume.

The European Commission has already proposed raising the cap to €100 billion through the Market Integration and Supervision Package (MISP). However, a coalition of 27 financial giants, including Nasdaq, Boerse Stuttgart Group, and Securitize, wants a further increase. The group has launched an aggressive lobbying campaign, arguing that even €100 billion is dangerously restrictive compared to the trillions of euros flowing through global capital markets.