Stablecoin issuer Circle is urging the European Commission to lower regulatory barriers for institutions engaging with crypto-asset service providers. The request comes in response to the Commission’s proposed Market Integration Package, aimed at modernizing Europe’s financial infrastructure.
Circle submitted its formal feedback on March 20, calling the MIP a "meaningful step" toward a digital financial system but stressing the need for reform in key areas. The company highlighted the DLT Pilot Regime and restrictions on e-money tokens as structural impediments.
The current rules limit settlement to only "significant" e-money tokens (EMTs), defined by high market capitalization thresholds under the Central Securities Depositories Regulation. Circle argues this creates a "chicken-and-egg scenario," excluding euro-denominated EMTs from gaining traction.
"Restricting settlement to ‘significant’ EMTs risks excluding euro-denominated EMTs," Circle said, warning the threshold stifles institutional participation and secondary market liquidity.
Circle advocates for adaptive criteria based on market uptake and liquidity, alongside supervisory assessments. It also wants the DLT Pilot Regime expanded beyond credit institutions to include licensed crypto firms.
The firm promotes its MiCA-compliant euro-backed stablecoin, EURC, in Europe. However, it notes no euro-denominated EMT currently meets the market cap threshold, limiting growth opportunities.
Circle views the MIP as a pivotal moment to integrate blockchain infrastructure with traditional finance through clear, proportionate regulation-potentially unlocking new efficiency and capital flow across EU markets.