Circle asks EU to ease crypto thresholds in proposed markets framework

Circle said no euro-denominated "e-money token," including its EURC stablecoin, has reached the framework's proposed market cap threshold for use in settlement.

Stablecoin issuer Circle has urged the European Commission to lower the barrier for institutions to engage with crypto-asset service providers in response to parts of its proposed Market Integration Package - a broad policy initiative aimed at strengthening capital markets in Europe. 

In a statement on Monday, Circle said the Commission’s MIP proposals represent a “meaningful step toward a digitally enabled financial system” but also outlined several areas for improvement.

Read Analysis

Those included reforming the DLT (distributed ledger technology) Pilot Regime and scaling what the Commission describes as e-money tokens (EMTs) by permitting more crypto-asset service providers to operate. Circle said it submitted its feedback to the Commission on March 20.

The main piece of crypto legislation in Europe is the Markets in Crypto-Assets Regulation, which took effect in December 2024.

However, it has been widely criticized by some crypto lawyers, including Yuriy Brisov, partner at Digital & Analogue Partners, who argued it is difficult to interpret and that its implementation varies from country to country.

Circle said the Commission’s MIP could offer Europe-based crypto market participants more legal clarity by outlining what crypto-assets can be used as collateral.

Circle recommended lowering the barrier to entry for e-money tokens to be used in settlement by changing the market capitalization threshold under the Central Securities Depositories Regulation.

“Restricting settlement to ‘significant’ EMTs risks excluding euro-denominated EMTs” and creates a “chicken-and-egg scenario that stifles their growth,” Circle said, adding that the thresholds are a “structural barrier to institutional participation and secondary market liquidity.”

Circle seeking to expand EURC in the region

In addition to Circle’s flagship USDC (USDC) stablecoin, the company also offers a euro-backed, MiCA-compliant stablecoin, EURC (EURC), in Europe.

However, Circle noted that no euro-denominated EMT is close to reaching the market cap threshold.

Circle said the Commission should adopt more “adaptive thresholds” that are based on criteria like market uptake and liquidity conditions while conducting supervisory assessments.

The company also said the DLT Pilot Regime, as currently proposed, restricts cash accounts to credit institutions and central securities depository financial institutions and that it should be expanded to include crypto-asset service providers.

Circle concluded that the MIP “represents a pivotal moment” for the EU to modernize its financial system and that connecting traditional finance with blockchain infrastructure through “clear and proportionate regulation” would unlock new levels of efficiency and liquidity in the region.