Stablecoin issuer Circle submitted feedback to the European Commission’s regulatory framework on integrating capital markets. An analyst says that Circle’s response is such that it pushes stablecoins to be treated as a core infrastructure, not as an edge case.
Circle wants improvement on four aspects
USDC stablecoin issuer Circle made a few suggestions to the European Commission’s regulations on integrating capital markets—the Market Integration Package (MIP).
The stablecoin issuer’s feedback touched on four points: Reforming the DLT pilot regime, EMTs for cash-leg settlement under the CSDR, calibrating centralized supervision, and providing legal certainty for EMTs as collateral.
Analyst Lavneet Bansal stated that the Market Integration Package is about making Europe’s capital markets work as one system, with faster settlement and fewer barriers across countries.
Circle’s response is pushing to ensure stablecoins are not treated as an edge case but as part of that core infrastructure. The message is simple: if markets are being rebuilt, stablecoins should be allowed to play a role in settlement, liquidity, and collateral.
Lavneet Bansal
Circle requests adaptive market value threshold
Commenting on the DLT pilot regime, Circle stated that the strict aggregate market value threshold is the main factor that is hindering institutional participation. As such, it requested that the market value threshold be adaptive and changed based on how the market is doing.
However, the European Commission set a threshold to ensure institutions don’t overexpose themselves before the market proves stable. In addition, if too many large investors enter at once, it can strain liquidity or create market manipulation risks.
Circle’s suggestion for improvement comes despite the European Commission stating, “the package focuses on removing regulatory barriers to innovation related to distributed ledger technology (DLT). It changes the rules to help these technologies and updates the DLT Pilot Regulation (DLTPR) to ease restrictions, make things more balanced and flexible, and ensure clear legal guidelines, which will promote the use of new technologies in finance.”
Circle wants ESMA to overlook cross-border crypto asset providers
Another concern that Circle raised was about the centralization of authority or ESMA overlooking the crypto asset service provider.
In an attempt to address the inconsistencies and complexities from fragmented national supervisory approaches, the European Commission gave the ESMA the authority over major market infrastructure.
“This includes transferring direct supervisory competences over significant market infrastructures such as certain trading venues, central counterparties (CCPs), CSDs, and all crypto-asset service providers (CASPs) to the European Securities and Markets Authority (ESMA) and enhancing ESMA’s coordination role for the asset management sector,” read the commission’s blog post.
However, Circle stated that centralized EU-level supervision should be reserved for large, cross-border crypto-asset service providers that present genuine systemic risk.
National Competent Authorities are often better positioned to provide agile oversight for non-systemic firms. Moreover, reopening the fundamental authorization and supervisory model risks prolonging regulatory uncertainty over MiCA implementation.
In addition, the USDC provider mentioned that in the European Union a single entity has been overlooked by ‘multiple national and union-level bodies under different regimes,’ which creates additional complexity and risks.
