Circle, the company behind USDC and EURC, has formally urged the European Union to soften key provisions of its crypto regulatory framework, warning that overly strict market capitalization thresholds could lock stablecoins out of securities settlement and stall institutional adoption across the bloc.
The stablecoin issuer submitted its feedback to the European Commission on March 20, 2026, targeting the proposed Market Integration Package (MIP), a regulatory layer built on top of the Markets in Crypto-Assets Regulation (MiCA) that became fully applicable across the EU in December 2024.
~$78.6B
USDC market capitalisation, Circle’s flagship stablecoin and primary asset regulated under MiCA’s e-money token (EMT) provisions.
What Circle Is Asking the EU to Change
Circle’s submission zeroes in on three specific reforms. First, the company wants the Central Securities Depositories Regulation (CSDR) market capitalization thresholds lowered so that euro-denominated e-money tokens (EMTs) can qualify for use in cash-leg settlement of securities transactions.
As currently drafted, the MIP would restrict settlement to “significant” EMTs. No euro-denominated EMT on the market today, including Circle’s own EURC, meets that bar.
Circle warned that this creates “a chicken-and-egg scenario that stifles growth”, since tokens cannot build the market cap needed to qualify if they are excluded from the very settlement use cases that would drive adoption.
Second, Circle is pushing to expand the DLT Pilot Regime, which currently limits settlement participation to banks and central securities depositories (CSDs), to include crypto-asset service providers (CASPs). Third, the company advocates for “adaptive thresholds” that adjust based on actual market uptake and liquidity conditions rather than fixed caps.
Circle is not a minor stakeholder in this debate. It holds an e-money institution license from France’s ACPR, making it the first global stablecoin issuer to comply with MiCA. Its euro stablecoin EURC now commands roughly 41% of the total euro stablecoin market, up from about 17% a year ago, a surge driven largely by MiCA-driven delistings of non-compliant competitors.
30 Dec 2024
Date MiCA became fully applicable across the EU, the regulatory baseline Circle is now urging lawmakers to revise.
Reform Backers See Growth, Critics See Gaps in Oversight
Supporters of Circle’s position argue that the current thresholds are self-defeating. If no euro EMT can meet the significance bar, the MIP’s settlement provisions become a dead letter, pushing tokenized securities activity to jurisdictions with lighter rules or no stablecoin settlement framework at all.
The timing reinforces that argument. MiCA has been fully in force for less than four months, and implementation has already drawn criticism for interpretation difficulties and inconsistencies across EU member states. Yuriy Brisov, a digital finance lawyer, noted that “MiCA’s complexity and variable implementation across EU jurisdictions creates significant friction for compliant operators.”
Full CASP authorisation is not required until July 1, 2026, meaning the regulatory landscape is still settling. Circle’s position is that adjusting the MIP now, before thresholds calcify, is easier than retrofitting them later.
Critics counter that loosening thresholds so soon after MiCA’s launch risks undermining the consumer protection rationale the regulation was built on. The “significance” requirement for settlement-eligible EMTs exists to ensure that only tokens with deep liquidity and broad market acceptance serve as cash legs in securities transactions.
There is also a competitive angle that complicates the reform narrative. Circle’s lobbying to lower thresholds would directly benefit EURC, its own product, in the institutional settlement market. A consortium of 10 EU banks called Qivalis is planning to launch a competing euro stablecoin in the second half of 2026, and bank-issued tokens may face a different path to “significance” given their issuers’ existing regulatory status.
Lowering the bar before bank-backed alternatives arrive could give Circle a first-mover advantage in EU settlement infrastructure, a point regulators will weigh carefully.
USDC Outlook and What Traders Are Watching
Circle’s regulatory push comes at a fragile moment for crypto markets. The Fear and Greed Index sits at 11, deep in “Extreme Fear” territory, and USDC’s 24-hour trading volume of roughly $12.8 billion reflects cautious positioning across the stablecoin market.
USDC itself trades at $0.9999, holding its dollar peg. With a market cap of approximately $78.6 billion, it remains the second-largest stablecoin globally. The bull case for Circle is straightforward: if the EU eases MIP thresholds and expands the DLT Pilot Regime, EURC gains access to a potentially large institutional settlement market, strengthening Circle’s revenue base and supporting its anticipated public listing.
The bear case is equally clear. If Brussels holds firm on the current thresholds, or delays MIP consultation timelines, Circle’s euro-denominated settlement ambitions stall. Meanwhile, Qivalis and other bank-backed entrants could build compliant settlement infrastructure on their own terms, potentially reshaping how tokenized assets settle in Europe without stablecoin issuers at the centre.
MiCA’s outcome carries weight beyond the EU. Regulators in the UK, Singapore, and elsewhere are watching how Europe balances innovation incentives against financial stability. Whether the Commission adjusts the MIP in response to Circle’s feedback, or holds the line, will signal how seriously post-MiCA reform requests are taken, and how much influence compliant crypto firms can exert on the frameworks they operate under.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
