Circle Urges European Commission to Reduce Market Cap Requirements in Crypto Framework
According to Circle, no stablecoin denominated in euros, including its own EURC token, has managed to achieve the market capitalization thresholds outlined in the framework for settlement participation.
The firm behind the popular stablecoin has petitioned the European Commission to reduce barriers preventing financial institutions from working with providers of crypto-asset services, responding to the Commission's newly proposed Market Integration Package — a regulatory effort designed to bolster capital market infrastructure across Europe.
Through a public statement released Monday, Circle expressed that while the Commission's MIP proposals mark a "meaningful step toward a digitally enabled financial system," the company has identified multiple opportunities for enhancement.
Among these recommendations were updates to the DLT (distributed ledger technology) Pilot Regime and expanding what the Commission categorizes as e-money tokens (EMTs) through allowing a greater number of crypto-asset service providers to participate. According to Circle, the company delivered its recommendations to the Commission on March 20.
The primary regulatory framework governing crypto-assets in Europe is the Markets in Crypto-Assets Regulation, which became enforceable in December 2024.
That said, the regulation has faced substantial criticism from certain legal experts in the crypto space, such as Yuriy Brisov, partner at Digital & Analogue Partners, who has contended that the framework is challenging to interpret and that enforcement approaches differ significantly across member states.
According to Circle, the Commission's MIP has the potential to provide crypto market stakeholders based in Europe with enhanced legal certainty by defining which crypto-assets are eligible for use as collateral.
The stablecoin issuer has advocated for reducing entry requirements for e-money tokens in settlement operations by modifying the market capitalization thresholds established 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,
the company stated, further noting that these thresholds function as a "structural barrier to institutional participation and secondary market liquidity."
Circle seeking to expand EURC in the region
Beyond its primary USDC stablecoin offering, the organization has launched a euro-backed, MiCA-compliant stablecoin known as EURC for the European market.
That being said, Circle observed that no e-money token denominated in euros has come anywhere near achieving the required market cap threshold.
The company has recommended that the Commission implement more "adaptive thresholds" determined by factors such as market adoption rates and liquidity conditions alongside regular supervisory assessments.
Circle further stated that the DLT Pilot Regime, in its present form, limits cash account access to credit institutions and central securities depository financial institutions, and argued that this access should be broadened to encompass crypto-asset service providers.
In its concluding remarks, Circle emphasized that the MIP "represents a pivotal moment" for the European Union to upgrade its financial infrastructure and that bridging traditional financial systems with blockchain technology through "clear and proportionate regulation" has the potential to unlock unprecedented levels of efficiency and liquidity throughout the region.