Circle urges EU to ease crypto rules, flags barriers in MIP plan

Circle has called on the European Commission to lower barriers for institutions seeking to engage with crypto-asset service providers, responding to the bloc’s proposed Market Integration Package.

The policy aims to deepen capital markets and accelerate the shift toward a more digitally integrated financial system.

In its submission dated March 20, the stablecoin issuer said the proposal marks progress but still contains structural hurdles that could limit adoption.

It highlighted concerns around thresholds, market access, and regulatory scope, arguing that adjustments are needed to ensure broader participation and smoother integration between traditional finance and blockchain-based infrastructure.

MIP framework and crypto access

The Market Integration Package is designed to strengthen Europe’s financial system by improving market connectivity and efficiency.

Circle said the initiative could help bring greater clarity to how crypto-assets are treated, especially in areas such as collateral usage.

The firm pointed to gaps in the current setup, particularly around access for institutions.

It argued that lowering entry barriers for crypto-asset service providers would allow more participants to engage with digital assets in regulated environments.

This, in turn, could support deeper liquidity and more active secondary markets.

MiCA rules and legal clarity

Europe’s main crypto framework, the Markets in Crypto-Assets Regulation, came into force in December 2024.

While it provides a unified rulebook, some legal experts have raised concerns about its interpretation and uneven application across member states.

Circle said the new package could complement existing rules by clarifying how crypto-assets can be used within financial markets.

By addressing uncertainties around collateral and settlement, the Commission could reduce fragmentation and improve consistency across jurisdictions.

EMT thresholds and settlement barriers

A key issue raised by Circle relates to e-money tokens, which are central to the Commission’s plans for digital settlement.

The company argued that current thresholds under the Central Securities Depositories Regulation limit participation by restricting settlement to tokens deemed significant.

According to Circle, this creates a structural bottleneck.

It warned that euro-denominated tokens are unlikely to meet these thresholds in the near term, effectively excluding them from broader use.

The firm described this as a cycle where limited access prevents growth, while lack of scale prevents eligibility.

To address this, Circle recommended adopting more flexible thresholds based on factors such as market uptake and liquidity conditions.

It said supervisory assessments should play a larger role in determining eligibility rather than fixed size requirements.

EURC growth and DLT regime limits

Circle also highlighted the need to revisit the distributed ledger technology Pilot Regime.

At present, the framework limits cash accounts to credit institutions and central securities depositories, excluding crypto-native providers.

The company argued that expanding access to crypto-asset service providers would better reflect how digital markets operate.

This could support the use of stablecoins like its euro-backed EURC alongside its US dollar-pegged USDC within regulated systems.

Circle noted that no euro-denominated token currently comes close to meeting existing thresholds, reinforcing the need for reform if such assets are to scale in Europe.

It said aligning traditional finance with blockchain infrastructure through proportionate regulation could unlock efficiency gains and improve liquidity across the region, positioning the EU for a more integrated digital financial system.