Circle Urges EU to Replace Stablecoin Bank-Deposit Mandates

Circle, the issuer behind the USDC stablecoin, has publicly urged European Union legislators to reconsider proposals that would require stablecoin reserves to be held as bank deposits. In its submission, Circle argued for alternative reserve compositions and pushed to retain the ability for stablecoins to be co-issued across borders, a structure that allows multiple entities in different jurisdictions to jointly issue the same token.

Alongside preserving cross-border co-issuance, Circle proposed the creation of a formal recognition route for stablecoins issued outside the EU. That pathway would let foreign-backed stablecoins operate in EU markets without being forced into local-only issuance models, according to Circle’s recommendations.

Those industry requests face resistance from central banks, which have been demanding tougher safeguards for stablecoins amid concerns about financial stability and consumer protection. Regulators and central bankers want stronger controls on reserve management, transparency, and operational resilience, reflecting a cautious approach to integrating privately issued stablecoins into the broader financial system.

The debate in Brussels highlights a broader policy trade-off: enabling cross-border digital-asset innovation and market access for established global issuers versus enforcing strict reserve and custody rules to limit systemic and consumer risks. How EU legislators balance those priorities will determine the compliance and operational strategies of major stablecoin issuers seeking access to European markets.