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The textile sector drives environmental degradation and social exploitation, sustained by a production model that fuels demand and reinforces unsustainable practices. New man-made cellulosic fibers, such as lyocell and ioncell, are promoted as eco-innovations for a biocircular economy because they derive from forest-based materials and can incorporate recycled cellulose. This research critically examines whether MMCFs can trigger a systemic transition of the textile value chain toward a biocircular model or simply reinforce existing unsustainable lock-ins. Using the Multi-Level Perspective framework, the study analyzes policy documents, industry reports, corporate practices, and academic literature to map landscape pressures, regime structures, and niche dynamics. Preliminary findings suggest that despite technical and ecological benefits, MMCF diffusion faces structural barriers including cost-driven supply chains and limited circular infrastructure. A paradox exists as MMCFs are promoted as transformative, yet being market-driven within fast fashion’s unsustainable linear system, raising doubts about their transformative potential and highlighting the need for governance to avoid lock-in and greenwashing.