Circle Pushes Back on MiCA's Bank-Deposit Mandate for Stablecoins
Circle told the European Commission that parts of the Markets in Crypto-Assets Regulation (MiCA) are driving major stablecoin issuers outside the EU’s regulatory perimeter. In a submission to the MiCA review, the USDC and EURC issuer urged Brussels to preserve multi-issuance and to relax deposit-focused reserve rules in favor of a more flexible liquidity standard.
Why It Matters
The recommendations come ahead of a wider MiCA overhaul planned for 2027 and could shape whether large, non‑EU stablecoins choose to comply with European rules or remain offshore. They also align Circle with the ECB’s critique of MiCA’s bank-deposit mandates, placing major industry players and regulators on the same side of a key policy debate.
Key Facts
- Submitter: Circle (issuer of USDC and EURC)
- Policy consulted: European Commission review of MiCA (Markets in Crypto-Assets Regulation)
- Top-25 stablecoins under MiCA: Only 3 of the top 25 stablecoins by market value are MiCA-regulated (per Circle)
- Current MiCA reserve mandate: Minimum 30% of reserves in commercial bank deposits; rises to 60% for tokens deemed 'significant'
- Other MiCA limits Circle challenged: 35% cap on single-sovereign exposure and a rule limiting how much reserves can be kept at any one bank (would force spreading reserves across many banks)
Circle has formally asked the European Commission to amend parts of MiCA it says are deterring the largest global stablecoins from operating under EU rules. In its submission to the MiCA review, the issuer of the dollar-pegged USDC and euro-pegged EURC praised the framework for producing many regulated issuers but said it has failed to attract the biggest tokens: only three of the top 25 stablecoins by market value are currently MiCA-regulated, Circle noted. A central gripe in Circle’s recommendations concerns how MiCA handles reserves. The existing rules require e-money token issuers to hold at least 30% of reserves in commercial bank deposits, a level that increases to 60% for tokens classified as “significant.” Circle argued that this approach raises banking-sector credit exposure rather than lowering risk, and it echoed the European Central Bank’s view that the deposit mandate should be replaced by a more flexible liquidity requirement. Circle also urged the Commission to preserve “multi-issuance,” the mechanism allowing a global stablecoin to be co‑issued by an EU-authorized entity alongside a foreign-regulated issuer. The company warned that restricting multi-issuance would simply push stablecoin activity offshore. In addition, Circle asked regulators to remove the 35% cap on single-sovereign exposure and a cap on holdings at any single bank — rules that, the company says, would force large issuers to distribute reserves across dozens of banking relationships. The submission arrives as Brussels prepares a broader MiCA revision, expected in 2027, aimed in part at dealing with foreign stablecoin issuers. The filing also takes place amid wider tensions over stablecoin influence, with U.S. issuers expanding internationally and authorities on both sides of the Atlantic debating how best to regulate these tokens. Meanwhile, Europe’s crypto sector continues to navigate MiCA’s transition rules, and regulators have been enforcing compliance with major platforms such as Binance.
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