Key Takeaways
- On March 20, Circle delivered its official response to the European Commission regarding the proposed Market Integration Package
- The company advocates for reduced market capitalization requirements for e-money tokens in settlement processes
- Currently, no euro-backed EMTâincluding Circle’s EURC stablecoinâsatisfies the existing threshold criteria
- Circle proposes “adaptive” market cap requirements that respond to market dynamics instead of rigid limits
- The company seeks to expand DLT Pilot Regime cash account access beyond banks to include crypto-asset service providers
The leading stablecoin issuer has warned European policymakers that their planned cryptocurrency settlement regulations impose excessive limitations that may hinder institutional embrace of tokenized financial markets.
On March 20, the company delivered its formal feedback to the European Commission concerning the Market Integration Packageâan extensive regulatory framework aimed at consolidating capital markets throughout the European Union.
While Circle acknowledged the MIP as a “meaningful step toward a digitally enabled financial system,” the firm emphasized that multiple provisions require substantial revisions before they can operate effectively in real-world applications.
The central concern revolves around e-money tokens and their eligibility for securities settlement operations. According to current proposals, only EMTs classified as “significant” would be authorized for cash-leg settlement purposesâa designation determined by market capitalization benchmarks.
Circle noted that no euro-denominated EMT, including its EURC stablecoin, currently approaches that threshold. EURC is presently trading at $1.16.
Circular Logic Stalls Market Development
The stablecoin provider characterized the situation as a fundamental obstacle. When tokens cannot participate in settlement until achieving a certain scale, yet cannot reach sufficient scale without settlement use, the regulatory structure creates a self-defeating cycle that blocks market expansion.
“Restricting settlement to ‘significant’ EMTs risks excluding euro-denominated EMTs,” Circle stated, characterizing the thresholds as a “structural barrier to institutional participation and secondary market liquidity.”
As a solution, Circle recommends that the Commission implement “adaptive” threshold mechanismsâstandards linked to actual market factors such as adoption rates and liquidity metricsârather than fixed parameters requiring complete legislative overhauls to modify.
The organization also highlighted timing concerns. It encouraged regulators to accelerate reforms independently of the broader legislative calendar, reinforcing concerns raised by tokenization platforms last month that procedural delays might redirect business activity to the United States, where blockchain-based market infrastructure is advancing more rapidly.
Expanding Access and Clarifying Collateral Standards
Beyond settlement threshold concerns, Circle criticized the current structure of the DLT Pilot Regime. The existing proposal restricts cash accounts within the regime exclusively to credit institutions and central securities depositories.
Circle advocates for broadening eligibility to encompass crypto-asset service providers, contending the present arrangement introduces needless operational obstacles and complications.
The company additionally requested more explicit guidelines regarding stablecoin use as collateral, referencing parallel initiatives underway in the United States and United Kingdom.
Concerning regulatory supervision, Circle recommended a more targeted approach to centralized EU-level oversight. It proposed that ESMA concentrate on major, cross-border entities, while smaller operators remain under national regulatory authority.
The primary European Union cryptocurrency legislation is the Markets in Crypto-Assets Regulation (MiCA), which became operational in December 2024. MiCA has faced scrutiny from certain legal professionals who describe it as challenging to interpret and inconsistently enforced across member nations.
Circle’s EURC represents a MiCA-compliant euro-backed stablecoin. The company’s primary offering continues to be USDC, currently valued at $1.
Circle described the MIP as a “pivotal moment” for the European Union to bridge traditional finance with blockchain technology, emphasizing that more transparent and balanced regulation would enhance efficiency and liquidity throughout the region.
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