Circle has urged the European Commission to revise parts of the Markets in Crypto-Assets Regulation (MiCA), including rules requiring stablecoin issuers to hold a fixed share of reserves in commercial bank deposits. The USDC and EURC issuer said the requirements increase exposure to banking-sector credit and counterparty risks and called for a more flexible framework based on reserve liquidity.
Circle submitted its response to the European Commission’s targeted MiCA review consultation on October 1, drawing on two years of operating experience as a MiCA-authorized e-money token issuer. The company said targeted changes could help Europe deepen stablecoin liquidity and adoption while bringing more globally used tokens within the EU regulatory perimeter.
Circle Calls for Changes to MiCA Reserve Requirements
MiCA currently requires e-money token issuers to hold at least 30% of reserve assets in commercial bank deposits, with the requirement rising to 60% for issuers of significant e-money tokens. Circle said the thresholds increase exposure to banking-sector credit and counterparty risks and agreed with the European Central Bank (ECB) that the mandatory deposit requirement should be reconsidered.
The company proposed replacing the fixed deposit thresholds with a less rigid minimum asset liquidity requirement. The proposal comes as other stablecoin issuers have raised concerns about the same framework. Tether CEO Paolo Ardoino recently said the company did not seek a MiCA license because of the stablecoin reserve requirements, particularly the requirement that can raise bank deposits to 60% for significant tokens.
Circle also called for the removal of two concentration rules introduced through the European Banking Authority’s Level 2 technical standards. One imposes a 35% cap on exposure to a single sovereign, while another limits deposits with an individual banking counterparty to 1.5% of that bank’s total assets. Circle said the rules could prevent dollar-denominated issuers from holding primarily sovereign high-quality liquid assets and force larger issuers to maintain relationships with dozens of banks.
The company also urged the Commission to preserve multi-issuance, which allows a globally circulating stablecoin to be issued by a MiCA-authorized EU entity alongside a foreign-regulated counterpart. The structure has received increased regulatory attention as EU regulators examine multi-issuance stablecoins, including how reserves and redemption obligations operate across jurisdictions.
Investor Takeaway
Circle wants the EU to replace fixed reserve deposit thresholds and concentration limits with rules that give stablecoin issuers greater flexibility while maintaining liquidity.
Circle Seeks Wider Access for Global Stablecoins
Circle said roughly 30 e-money tokens have received MiCA authorization, while only three of the 25 largest stablecoins globally by market capitalization are currently regulated under the framework. The company identified USDC, USDG and EURC among those three and said the gap shows that MiCA needs to capture more globally significant stablecoins.
The regulated stablecoin market in Europe has continued to expand, with Stripe-owned Bridge joining the MiCA register as an authorized electronic money token issuer in August after securing approvals in Luxembourg.
Circle proposed an equivalence and recognition regime for foreign-regulated stablecoin issuers. Under the model, the European Commission would determine whether a foreign jurisdiction has an equivalent regulatory framework, while the European Banking Authority would recognize individual issuers. A locally licensed institution would handle distribution within the EU.
Circle already operates under MiCA and has expanded its regulated European services. In April, the company received French authorization to provide custody and transfer services for USDC and EURC, allowing Circle France to passport those services across the European Economic Area.
Investor Takeaway
Circle is seeking a recognition framework that would allow more foreign-regulated stablecoin issuers to access the EU market under equivalent regulatory standards.