DLT Pilot Regime Reform: What Changes for Issuers of Tokenized Securities

The DLT pilot regime, set out in Regulation (EU) 2022/858 and applicable since March 2023, allows authorized operators to run trading venues and settlement systems for tokenized securities under temporary exemptions from parts of EU financial markets law. On 4 December 2025 the European Commission proposed to rework it as part of the Market Integration and Supervision Package, and on 9 October 2026 the Council agreed key elements of its own position on that package.

This article explains what the DLT pilot regime allows today, what the Commission and the Council want to change, where the legislative process stands as of November 2026, and how prospectus rules apply to tokenized offerings. It also compares the EU approach with Liechtenstein's TVTG and lists what an issuer can sensibly do while the final text is still open.

What Does the DLT Pilot Regime Allow Today?

How the regime works

The regime does not create a new type of security or a new offering framework. It creates three types of market infrastructure: a DLT multilateral trading facility (DLT MTF), a DLT settlement system (DLT SS) and a combined DLT trading and settlement system (DLT TSS). Operators that receive authorization from their national competent authority can admit DLT-based transferable securities to trading and settle them on a distributed ledger, with exemptions from certain MiFID II, MiFIR and CSDR requirements that were written with traditional intermediaries in mind.

For an issuer, this means the regime matters mainly because it decides where a tokenized security can be traded and settled in the EU without a conventional central securities depository chain.

Thresholds that limit eligible issuers

The regime applies only to specific instruments and sizes. Shares qualify only if the issuer's market capitalization is below €500 million, and bonds and UCITS units face their own size limits. The market value of all instruments admitted to a single DLT market infrastructure is capped at €6 billion at admission, and a lower trigger of €9 billion in the regulation's text requires the operator to follow a transition strategy bond and UCITS limits and the €9 billion trigger against Article 3 of Regulation (EU) 2022/858 on EUR-Lex].

These limits explain why large issuers and large operators have stayed away. Taylor Wessing's June 2026 commentary notes that the number of authorized participants and the volume of trading remain very modest, and ESMA's June 2025 review of the regime reached a similar conclusion while recommending changes that would make it permanent and more attractive.

What Did the Commission Propose in December 2025?

The proposal in outline

The Commission's proposal forms part of procedure 2025/0383(COD). Taylor Wessing describes the reform as two sets of changes: some extend the scale and scope of the regime, and others add flexibility and proportionality for smaller operators.

On scale, the proposal would lift the aggregate cap on a single DLT market infrastructure from €6 billion to €100 billion the €100 billion figure comes from Hokenfi and Ledger Insights, so confirm it against the Commission's proposal text]. It would also remove the time limits on authorizations that currently make the regime a pilot in name and in practice.

A simplified tier for smaller operators

On proportionality, the proposal adds a simplified regime for operators whose activity stays below €10 billion in aggregate market value. Existing authorized operators would be treated as operating under the simplified regime as long as they remain under that level. The Commission identified the compliance burden on small and medium-sized businesses as one of the main obstacles to wider use of the regime, and the simplified tier is its response.

What this means for issuers

Issuers do not apply for authorization under the regime, so the changes reach them through the venues they use. A higher cap and a lighter tier for smaller operators should widen the number of venues willing to admit tokenized shares and bonds, and the larger limits would allow bigger issuers into a venue that today would turn them away. Sources disagree on whether the €500 million market capitalization limit for shares survives in the proposal read the amended Article 3 in the Commission text before stating the issuer-size position].

Where Do the Council and Parliament Stand?

The Council position

According to the Council's announcement of 9 October 2026 and law-firm summaries of it, ministers agreed the key elements of a negotiating position, while finalization and formal adoption are still ahead. Reports on its content say the Council would raise the main cap to €300 billion, with a possible later increase to €500 billion through a Commission delegated act, and would move only the most significant cross-border crypto-asset service providers to direct ESMA supervision at the start he €300 billion and €500 billion figures and the ESMA scope, which rest on Ledger Insights, PwC Legal and Stobox rather than on the Council text].

The gap between €100 billion and €300 billion is the most visible open point between the institutions, and ledger-industry press reports that the ECB's president objected to the higher figure.

The Parliament position

The European Parliament has not adopted its negotiating position. The ECON committee published draft reports on the package in June 2026, and the committee vote is expected in December 2026, although one source gave 1 November 2026 as the date check the ECON calendar on the European Parliament website]. After the committee vote, Parliament and Council still have to reach a trilogue agreement and the text must be formally adopted and published in the Official Journal. The European Council has called for negotiations on the package to conclude by the end of 2026, which is a political objective and not a date from which the rules apply.

Until publication, Regulation (EU) 2022/858 applies in its current form, with the limits described above.

What Prospectus Rules Apply to Tokenized Offerings in the EU?

The DLT pilot regime governs trading and settlement infrastructure, and it does not contain a general prospectus exemption for tokenized securities. A public offer of tokenized shares or bonds to investors in the EU falls under the Prospectus Regulation (EU) 2017/1129 in the same way as a paper-based offer, so the issuer must publish an approved prospectus unless an exemption applies.

The usual exemptions are the ones that apply to any security: offers addressed only to qualified investors, offers to fewer than 150 persons per member state, and small offers. Under the regulation, offers with total consideration below €1 million over 12 months are exempt, and member states may set a national threshold up to €8 million Article 1(3) and Article 3(2) of Regulation (EU) 2017/1129]. Admission of the tokenized security to a DLT MTF is a separate step with its own venue rules and can also trigger prospectus requirements depending on the instrument and the venue.

Issuers that also want to offer tokens that are not financial instruments should check whether MiCA applies, since MiCA excludes instruments that already qualify as financial instruments. The overview of regulations on cryptocurrency in the EU and worldwide covers where that line is drawn.

How Does the DLT Pilot Regime Compare With the Liechtenstein TVTG?

Different problems, different tools

Liechtenstein's Token and TT Service Provider Act (TVTG) has applied since 1 January 2020 and answers a different question from the EU regime. It defines how rights can be represented in a token and transferred on a trustworthy technology system, and it requires many service providers to register with the Financial Market Authority (FMA). The DLT pilot regime does not address that civil-law layer and concentrates on how a venue or settlement system may operate.

Practical differences for an issuer

Under the TVTG, a token issuer prepares a disclosure document called the basic information (Grundlageninformation) and reports the issuance to the FMA, while a public offer of tokenized securities in the EEA can still require a prospectus under EU law. FMA registration is effective only in Liechtenstein, so there is no passporting of the kind known from EU financial market laws.

The EU regime, by contrast, works through national competent authorities but is a single regulation, so an authorization under it is recognized on the basis of one rulebook. For issuers, the two are therefore often combined: Liechtenstein law for the legal form of the token and the EU regime or MiCA for the market side.

What Should Issuers Do Now?

Most issuers start by deciding whether the current limits actually affect them. An issuer with a market capitalization above €500 million, or a bond issue near the size limit, cannot use a DLT MTF today, and a company in that position usually waits for the final text before designing a structure around the reform.

For smaller issuers, the steps below are the ones that do not depend on the outcome of the negotiations:

1. Confirm the instrument type and whether it qualifies as a financial instrument under MiFID II or falls under MiCA.

2. Check which prospectus exemption applies to the planned offer and in which member states.

3. Choose the issuing entity and jurisdiction, which often means company formation in an EU member state or in Liechtenstein.

4. Identify which DLT MTF or settlement system operators hold an authorization and what admission requirements they apply, using ESMA's published list of authorized DLT market infrastructures.

5. Plan any crypto-asset service provider role the structure needs, since a crypto license under MiCA is a separate regime from the DLT pilot regime.

Additional detail on structuring an offer is in the guide to RWA tokenization in the EU.

Final Thoughts

The reform proposed in December 2025 would lift the €6 billion cap on a single DLT market infrastructure, remove the time limits on authorizations and add a simplified tier below €10 billion, but the Council and Parliament have not agreed on the figures and the final text is not yet adopted. Until it is published in the Official Journal, issuers work under the current limits, and the prospectus rules apply to tokenized offerings exactly as they do to other securities.

An issuer planning an offer in 2027 should fix the legal structure, the prospectus route and the choice of venue first, and then check the final figures once the trilogue ends. Icon.Partners advises on tokenization structures, prospectus questions and the licensing side of tokenized offerings in the EU and Liechtenstein, and can help you map your project against both the current rules and the reform.