Circle urges EU to revise stablecoin reserve rules in MiCA review

Circle urged the European Commission to amend MiCA’s reserve rules in its response to the commission’s consultation on the regulation’s review. The company argued that statutory requirements forcing issuers to hold large portions of reserves as bank deposits increase exposure to banking-sector credit and counterparty risks. Circle pointed to the March 2023 episode in which $3.3 billion of its reserves were held at Silicon Valley Bank and contributed to a temporary loss of USDC’s dollar peg as an example of that risk. Under current MiCA provisions cited by Circle, e-money token issuers must hold at least 30% of reserves in commercial bank deposits, with a 60% minimum applying to significant issuers. Circle recommended replacing these fixed deposit minimums with a more flexible minimum asset liquidity requirement, a position it said aligns with the European Central Bank’s thinking. The firm also asked the Commission to remove two concentration limits: a 35% cap on exposure to a single sovereign and a limit that restricts deposits with any single counterparty to 1.5% of that bank’s total assets. Circle additionally pressed the EU to preserve “multi-issuance,” a structure in which an EU-authorized entity and a foreign-regulated counterpart co-issue a stablecoin. The company warned that limiting this arrangement could push users toward offshore providers not subject to MiCA’s protections. Other stakeholders also submitted views to the consultation. The Hyperliquid Policy Center recommended that perpetual futures be regulated under the EU’s existing securities and derivatives framework (MiFID II) with rules tailored to their market structure and recognition of public blockchain records for transparency and recordkeeping. The Global Blockchain Business Council asked for clearer token classification, proportionate stablecoin safeguards, reduced overlap between MiCA and payment-services rules, and defined cross-border redemption responsibilities alongside enforceable reserve rebalancing and an accountable EU supervisory framework.