Circle Urges EU to Accelerate Crypto Reforms to Stay Competitive

Circle has called on European regulators to accelerate reforms to digital asset legislation, warning that slow regulatory progress could hinder institutional adoption of tokenized financial markets and reduce Europe’s competitiveness in the global digital finance sector.

The stablecoin issuer submitted its recommendations to the European Commission as part of consultations on the bloc’s proposed financial services reforms, known as the Market Integration Package. The legislative initiative aims to create a more unified financial market across the European Union and includes updates affecting multiple existing financial regulations.

Circle said it broadly supports the reforms but believes some elements, particularly those related to blockchain-based financial infrastructure, should be implemented more quickly to avoid delaying innovation.

Focus on the DLT Pilot Regime

A key issue raised by Circle concerns the EU’s Distributed Ledger Technology (DLT) Pilot Regime, introduced in 2023 to allow regulated firms to test tokenized financial instruments such as digital securities on blockchain-based trading and settlement systems.

Despite the initiative, adoption has been limited so far, with only a small number of projects approved and relatively few live transactions conducted under the framework. Industry observers have suggested that regulatory complexity and operational limits may have discouraged broader participation.

Circle argued that the European Commission should accelerate updates to the DLT Pilot Regime and provide a clear timeline for transitioning from the experimental pilot phase to a permanent regulatory framework. According to the company, long-term infrastructure investment in tokenized markets requires regulatory certainty and clear rules.

Market Integration Package Seen as Important Step

Circle described the Market Integration Package as an important step toward building a digitally enabled financial system in Europe. However, the company recommended additional adjustments to ensure the regulatory framework remains flexible and supports innovation.

Among the recommendations were proposals to introduce adaptive thresholds for tokenized market activity, allowing regulatory limits to adjust based on market size, liquidity, and adoption levels. The company also called for clearer rules regarding the use of stablecoins and electronic money tokens in settlement systems and as collateral.

Concerns Over Regulatory Oversight Changes

Circle also raised concerns about proposed changes that would shift supervision of crypto-asset service providers to the European Securities and Markets Authority. The company said any changes to supervisory structures should be carefully designed to avoid regulatory uncertainty or operational disruption.

The firm also emphasized the need for legal clarity regarding the use of regulated stablecoins in financial markets, particularly for collateral and settlement purposes, arguing that clear rules would help ensure European markets remain competitive internationally.

Europe Competing in Global Digital Finance

The company’s recommendations highlight growing competition between major financial centers to attract digital asset infrastructure, tokenized markets, and blockchain-based financial services.

As the United States, Asia, and the Middle East continue developing digital asset regulations and tokenization frameworks, Europe faces increasing pressure to ensure its regulatory environment supports innovation while maintaining financial stability and investor protection.

Circle’s message to European regulators was clear: regulatory clarity and faster implementation timelines could play a decisive role in determining whether Europe remains competitive in the emerging digital asset and tokenized finance industry.