Circle urges EU to fast-track DLT reforms, widen stablecoin settlement rules

Circle is urging European policymakers to accelerate updates to the bloc’s digital asset framework, arguing that delays risk slowing institutional adoption of tokenized markets.

In feedback submitted March 20 on the European Commission’s Market Integration Package, the stablecoin issuer said the plan is a “meaningful step” toward modernizing capital markets but still leaves gaps around scalability, supervision, and settlement.

Circle largely backed proposed changes to the EU’s Distributed Ledger Technology (DLT) Pilot Regime, including expanding eligible assets and raising volume thresholds, but said current limits continue to constrain liquidity and institutional participation.

It proposed introducing “adaptive” thresholds tied to market conditions, rather than relying on periodic legislative updates, and called for a clearer path from the pilot phase to permanent rules.

The firm also urged regulators to fast-track changes outside the broader legislative timeline, echoing concerns raised by tokenization firms last month that delays could push activity toward the U.S., where onchain market infrastructure is advancing more quickly.

Stablecoins in settlement

Another key focus of Circle’s response was expanding the role of MiCA-compliant stablecoins in securities settlement.

The company welcomed proposals to recognize e-money tokens for cash-leg settlement but warned that limiting access to only “significant” tokens could exclude euro-denominated stablecoins and slow adoption.

It also called for allowing crypto service providers, not just banks and central securities depositories, to offer settlement accounts, arguing that the current structure adds friction and complexity.

Supervision and collateral

Circle pushed for a narrower scope for centralized EU supervision, suggesting ESMA oversight be limited to large, cross-border firms, while smaller players remain under national regulators.

It also called for clearer rules allowing stablecoins to be used as collateral, pointing to parallel efforts in the U.S. and UK.