US-based stablecoin issuer Circle has made an official application to the European Commission, requesting that the high capital threshold determined within the scope of the Market Integration Package being prepared by the European Union be reduced. The company, which operates in the field of digital assets, emphasized that current regulations prevent the development of euro-denominated stablecoins.
Growth Obstacle in the Stablecoin Market
Circle points out that the framework created especially for the euro-indexed stablecoin EURC makes it difficult to enter the market and grow. According to the regulation draft, only electronic money tokens that have reached a certain market size can be used as payment instruments in traditional financial markets.
However, currently no euro-based stablecoin, including EURC, has reached this threshold. The company argues that these conditions create a paradox: Stablecoins must already have a large market cap to be usable with institutional actors such as banks and asset management companies; However, it does not seem possible for them to reach this size without permission for corporate use.
Circle requested that this mechanism in the DLT Pilot Regime be changed to break the chain and allow small-scale euro stablecoins to be officially used in bond and securities payments.
In the statement made by Circle, it was stated that if the current limits continue, euro stablecoins will continue to remain outside the financial infrastructure and new market initiatives in Europe may become stagnant before they start.
The company suggests that if its proposed revisions are implemented, digital assets such as EURC could become a common means of payment and collateral. Thus, banks and large investors will have the opportunity to carry out euro-based transactions on-chain.
Compliance Problem in Regulations and Future Expectations
This move by Circle comes on the heels of MiCA, the European Union’s crypto asset regulation, coming into force in December 2024. While MiCA determines the licensing framework for stablecoin issuers, the Market Integration Package aims to establish the cross-border transfer and clearing infrastructure.
However, it is stated that there are legal uncertainties since MiCA applications differ between member countries. Yuriy Brisov, partner at Digital & Analogue Partners, states that the industry operates in a gray area due to differences in interpretation of the existing rules.
This fragmented structure is intended to be eliminated with the new package proposed by the commission. However, Circle points out that more flexible thresholds in favor of stablecoins are essential for the realization of on-chain economic infrastructure. While negotiations on the final text continue, the integration of euro-based digital assets into the financial system remains unclear.
