Circle Urges EU Crypto Reform as $0 Euro Stablecoins Hit Barrier in New MIP Rules

Key Takeaways:

• Circle urges the EU to make some amendments to its Market Integration Package to initiate institutional crypto adoption
• The existing regulations are barring euro stablecoins such as EURC from entering settlement markets. 
• The firm pushes for flexible rules, broader access, and clearer paths for tokenized finance. 

Circle is stepping deeper into Europe’s regulatory debate. The stablecoin issuer has responded to the European Commission’s latest capital markets proposal, highlighting key barriers slowing crypto adoption.

Circle submitted its feedback on March 20, targeting the EU’s proposed Market Integration Package (MIP). The company supports the direction but says several rules could limit growth if left unchanged.

At the center is the DLT Pilot Regime, a framework designed to test blockchain-based financial infrastructure. Circle argues that current market value caps still act as a hard ceiling for institutions.

Instead of fixed limits, the firm suggests a more flexible system that adjusts based on liquidity, adoption, and regulatory oversight. This would give firms more clarity when committing long-term capital.

Circle also desires a transition way. In case there is no tangible roadmap between pilot and full regulation, institutions may be suspicious of investing large sums in blockchain infrastructure.

Read More: Circle Unveils Gas-Free USDC Nanopayments Enabling $0.000001 AI Transactions

There is a concern on how e-money tokens (EMTs) can be integrated into settlement systems. These tokens, regulated under MiCA, include euro-backed stablecoins like EURC.

Read More: MiCA Reality: EU Countries Set to Lead CASP Licensing in the New Era

Circle warns that restricting settlement to “significant” EMTs creates a bottleneck. Right now, no euro-denominated stablecoin meets the required scale.

This creates a loop: tokens can’t grow without usage, but they can’t be used because they haven’t grown. To fix this, Circle recommends allowing all MiCA-compliant EMTs to participate, not just those above a certain market cap.

The firm also suggests expanding who can provide settlement services. t this point, banks and central securities depositories are the only ones that can use EMTs, whereas Circle explains that registered crypto providers of services also need the new option in order to stay in line with the evolving market.

Circle discussed MiCA supervision, as well. It supports a greater level of EU-level regulation, but believes that it is crucial to strike big, cross-border wholesalers which are indeed systemically important.

For smaller firms, national regulators may be more efficient. Too many overlapping authorities could slow operations and increase compliance costs.

Another key point is collateral usage. Circle is pushing for clear legal recognition of EMTs in collateral frameworks. Global regulators are already moving in this direction. Circle warns the EU risks falling behind if it doesn’t act quickly.

Circle suggests that some updates, especially to the DLT framework should be fast-tracked instead of bundled into broader reforms. Delays could weaken Europe’s position in the race for crypto innovation.

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