Circle is urging European regulators to move faster in updating digital asset rules, warning that delays could limit the region’s ability to compete in rapidly evolving financial markets. The stablecoin issuer has called for changes to the European Union’s framework governing distributed ledger technology, arguing that current structures are too rigid for markets that scale quickly once liquidity builds. The request comes as tokenization and blockchain based settlement systems gain traction globally, with firms seeking clearer and more adaptable regulations to support institutional participation and long term growth.
The company expressed support for ongoing efforts to modernize capital markets but highlighted several gaps that could hinder adoption if not addressed. One of the primary concerns is the existing limits within the DLT pilot regime, which restrict the volume of assets and participants allowed within these experimental frameworks. Circle argues that such caps reduce liquidity and discourage institutional involvement, especially as blockchain based systems begin to attract more users. To address this, the firm has proposed introducing flexible thresholds that adjust based on market conditions rather than relying on fixed limits that may quickly become outdated.
Another major focus of Circle’s recommendations is expanding the role of stablecoins in financial settlement processes. The company emphasized that stable digital currencies compliant with European regulations should be more widely accepted for settling securities transactions. Limiting access to only a narrow category of tokens, it argued, could slow innovation and restrict the use of euro denominated stablecoins. By broadening eligibility, regulators could enable more efficient settlement mechanisms and support the development of tokenized financial markets that operate with greater speed and lower costs.
Circle also raised concerns about the current structure of settlement systems, which largely restrict access to traditional financial institutions such as banks and central depositories. The firm suggested that crypto service providers should be allowed to offer settlement accounts, reducing complexity and improving efficiency within the ecosystem. This approach reflects a broader push to create a more open financial infrastructure where blockchain based participants can operate alongside established institutions without unnecessary barriers. The goal is to streamline processes and encourage innovation while maintaining appropriate safeguards.
In addition to settlement reforms, the company called for clearer guidelines around the use of stablecoins as collateral and more targeted supervisory oversight. It recommended that centralized European supervision focus primarily on large cross border entities, allowing smaller participants to remain under national regulatory frameworks. This balance, Circle argues, would support both innovation and stability by ensuring that oversight is proportional to scale. As competition between global markets intensifies, the direction of EU policy could play a significant role in determining where digital asset activity and institutional adoption continue to grow.
