Circle submitted a response to the European Commission’s 2025 targeted consultation on the integration of EU capital markets.
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At Circle, we believe that the future of capital markets is onchain—open, programmable, and globally accessible. That’s why we welcomed the opportunity to respond to the European Commission’s 2025 targeted consultation on the integration of EU capital markets.
Europe has already laid critical foundations with the Markets in Crypto-Assets Regulation (MiCA) and the DLT Pilot Regime. But unlocking the full potential of tokenized capital markets will require building on this momentum with pragmatic and innovation-friendly reforms.
Our submission underscores three key priorities for the EU’s future capital markets framework:
1. Enable MiCA-Compliant EMTs as Settlement Assets
MiCA-authorized electronic money tokens (EMTs), such as Circle’s EURC, are ideally suited for use as settlement instruments in capital markets. Fully backed by reserves and available 24/7, they offer faster, cheaper, and more transparent settlement than legacy payment rails. However, current frameworks like the Central Securities Depositories Regulation (CSDR) and Settlement Finality Directive (SFD) don’t yet recognize EMTs as cash equivalents. Updating these definitions would unlock safe, programmable settlement for a wide range of tokenized instruments.
2. Reform the DLT Pilot Regime
The DLT Pilot Regime is a welcomed first step, but to maximise its potential to attract meaningful institutional participation, we recommend removing the issuance thresholds, including structured bonds and derivatives, and making the pilot a permanent, scalable regime with flexible, principles-based oversight.
3. Modernize Capital Markets Rules for a Tokenized Era
Key EU rules—including those under CSDR, the Financial Collateral Directive, and MiFID II—are still built around traditional, centralized systems for issuing, holding, and settling financial instruments. As markets evolve toward tokenized models, we advocate for updated rules that recognize modern forms of digital control and ownership, such as self-custody or smart contract-based multi-signature wallets. Introducing more flexible, service-specific authorization models will help ensure that new market infrastructures are regulated in a way that reflects the actual risks and functions they perform.
Europe’s Moment to Lead
With MiCA and the DLT Pilot Regime, the EU has a unique first-mover advantage. By updating outdated rules and embracing tokenization with pragmatism and conviction, Europe can become one of the leading global hubs for tokenized capital markets.
