Circle, the stablecoin issuer behind USDC, has called on the European Commission to ease the regulatory thresholds for institutional participation in crypto markets as part of its proposed Market Integration Package (MIP).
In a statement, Circle expressed support for the MIP’s aim to modernize the European financial system but highlighted the need for more flexible regulations, particularly around the use of e-money tokens (EMTs) and distributed ledger technology (DLT).
Lowering Barriers for E-Money Tokens
One of the key recommendations from Circle is to lower the market capitalization threshold under the Central Securities Depositories Regulation (CSDR). The current threshold, which restricts the use of EMTs for settlement to those deemed ‘significant,’ poses a significant barrier to the growth of euro-denominated EMTs like Circle’s EURC.
“Restricting settlement to ‘significant’ EMTs risks excluding euro-denominated EMTs and creates a ‘chicken-and-egg scenario’ that stifles their growth,” Circle stated. The company argued that adopting more adaptive thresholds based on market uptake and liquidity conditions would encourage broader institutional participation.
Expanding the DLT Pilot Regime
Circle also suggested expanding the DLT Pilot Regime to include a wider range of crypto-asset service providers. Currently, the regime restricts cash accounts to credit institutions and central securities depository financial institutions, which limits the potential of blockchain technology in the European market.
“Expanding the DLT Pilot Regime to include crypto-asset service providers would foster innovation and provide more legal clarity for market participants,” the company noted.
Regulatory Clarity and MiCA
The Markets in Crypto-Assets Regulation (MiCA), which took effect in December 2024, has been criticized for its complexity and inconsistent implementation across EU member states. Circle sees the MIP as an opportunity to address these issues and provide more clarity on the use of crypto-assets as collateral.
“The MIP represents a pivotal moment for the EU to modernize its financial system and bridge the gap between traditional finance and blockchain infrastructure through clear and proportionate regulation,” Circle concluded.
Forward-Looking Insights
As the EU continues to shape its crypto regulatory landscape, the input from industry leaders like Circle is crucial. By lowering barriers and providing more flexibility, the EU can foster a more inclusive and innovative crypto ecosystem, potentially setting a global standard for crypto regulation.
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