On March 20, Circle sent the European Commission a proposal to relax rules that limit the use and dissemination of crypto-assets in the European Union (EU) financial market. The company pointed out structural obstacles that compromise the adoption of digital tokens, especially in the context of the Market Integration Package, a regulatory package aimed at integrating digital financial systems and capital markets in the region.
Since December 2024, the Markets in Crypto-Assets Regulation (MiCA) has established a set of rules to standardize the treatment of crypto-assets among EU Member States. However, Circle revealed that the limits defined by the Central Securities Depositories Regulation (CSDR) still restrict the broad use of tokens, especially those denominated in euros, such as USDC and EURC. According to the company, these digital assets do not meet the minimum thresholds to be more robustly incorporated into traditional financial operations.
On the other hand, Circle recommends that eligibility criteria be adapted based on more flexible indicators, such as effective market adoption and token liquidity. Furthermore, the proposal includes the need to clarify the use of crypto-assets as collateral in different segments of the financial markets, which could expand their practical application and reduce regulatory uncertainties.
Another issue raised concerns the difficulties that companies linked to digital assets face to participate in the pilot regime for distributed ledger technologies in the European Union. Currently, restrictions limit the involvement of these providers, which ultimately prevents innovation progress in the sector. Thus, Circle suggests expanding access to include relevant stablecoins in the digital market, especially those backed by the euro.
The submitted document also highlights the current regulatory fragmentation and inconsistency in the application of rules among member countries. Circle emphasizes that replacing fixed criteria with continuous supervisory evaluations could correct these disparities and promote a more integrated environment for crypto-assets.
Without adjustments, the company warns that euro-denominated tokens will hardly experience significant growth or be eligible for expanded use in the European Union’s financial systems. Therefore, the regulatory package could serve as a complement to existing rules, improving communication between traditional finance and blockchain-based technologies.
Financial institutions, in turn, still face barriers to initiating operations with crypto-assets, which restricts the sector’s expansion in the region. Circle states that the rigid limits currently applied generate a low-scale cycle, making access and liquidity in the digital asset market difficult.
Finally, the company reinforces the importance of reviewing the pilot regime for distributed ledger technology to increase efficiency and liquidity in digital financial markets within the EU. The expectation is that the Commission will evaluate the proposal so that these changes can support the sector’s evolution.
