Crypto01 October, 20262 min read
Circle Urges European Commission To Amend MiCA Stablecoin Rules, Citing Only Three Compliant Tokens
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Only three of the world's top 30 stablecoins meet MiCA compliance, per Circle. Circle urges EU to replace fixed 30%/60% bank-deposit reserves with flexible liquidity rules.
23 outlets told this the same way.
Circle targets MiCA gaps
Circle urged the European Commission to amend Markets in Crypto-Assets Regulation for stablecoins, arguing that many of the largest stablecoins by market value are not currently subject to the rules. Patrick Hansen, director of EU strategy and policy at Circle, said only three of the 30 most popular stablecoins meet MiCA requirements: USDC $0.9998, USDG $0.9999, and EURC. Circle also warned that issuers operating in multiple jurisdictions face restrictions that could lead to European stablecoin users turning to foreign competitors instead of regulated European companies.
Circle said it submitted its response to the European Commission’s MiCA Review Consultation and framed its feedback around two years of experience operating USDC and EURC under MiCA. Circle’s proposal sought to recognize stablecoins issued and regulated by other countries through an approach that would let stablecoin issuers be largely regulated in their home countries while distributing in Europe through European-regulated entities.
Bank deposit floors under fire
Circle pushed the EU to replace MiCA reserve requirements that require e-money token issuers to hold at least 30% of reserves in commercial bank deposits, with a higher minimum of 60% for significant issuers. Circle argued that mandatory bank-deposit requirements expose stablecoin issuers to banking-sector credit and counterparty risks, and it pointed to March 2023 when USDC temporarily lost its dollar peg after Circle disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank. Circle said US authorities protected the bank’s depositors and the funds became available to Circle, and it urged policymakers to focus on liquidity of reserve assets instead of fixed deposit thresholds.
Circle also backed removing two reserve concentration limits, including a 35% cap on exposure to a single sovereign and a ceiling on deposits with each counterparty equivalent to 1.5% of that bank’s total assets. Circle aligned with the European Central Bank by calling for a more flexible minimum asset liquidity requirement rather than fixed bank deposits.
Multi-issuance and rewards debate
Circle urged the Commission to preserve “multi-issuance,” through which a European Union-authorized entity and a foreign-regulated counterpart co-issue a stablecoin. Circle argued that restricting that structure would push users toward offshore providers outside MiCA’s protections, and it also sought a framework to allow non-EU stablecoins to be issued in the EU after obtaining regulatory approval. At the same time, Stand With Crypto EU pressed the MiCA review to allow regulated stablecoin issuers to offer rewards to holders, and it said its campaign collected more than 126,000 signatures for a separate petition.
Harry Pearce Gould, the group’s general manager, said in an interview with Cointelegraph, "We are calling on the Commission to use the MiCA review to allow regulated stablecoins to offer rewards to holders," while the European System of Central Banks proposed widening the stablecoin interest prohibition to cover lending, borrowing, staking and other yield-generating activities. Christine Lagarde warned that a shift of deposits from banks into stablecoins could weaken banks’ lending function and impair the transmission of monetary policy, as the MiCA review faces competing pressure from issuers and central banks.