In March 2023, the EU DLT Pilot Regime commences, enabling regulated tokenized securities to be traded using blockchain technology. While the sandbox supports some regulatory exemptions (see footer), it has financial limits. Market participants are concerned about these monetary caps, the potential six-year duration of the sandbox and uncertainty about what happens at the end.
There are few bigger capital market players than BNY Mellon, the world’s number one global custodian with $43 trillion in assets under custody and administration. While highly supportive of the DLT Pilot Regime goals, BNY Mellon’s Benjamin Duve has reservations. “The true problem for us and many of the other bigger players in the market is if you look at the caps – who can issue, how much you can put in the system – the limits can be reached within days. Or the majority of our clients cannot be served,” said Duve, talking at the Crypto Assets conference.
According to the EU legislation, any distributed ledger platform has an overall volume limit of €6 billion ($5.9bn) of securities issuance or a market capitalization of €9 billion ($8.8bn). Additionally, any issuance is capped at €500 million for equities (company market cap) and funds and €1 billion for bonds.
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