Circle urges EU to replace MiCA's stablecoin bank-deposit mandate

Circle is pushing the European Union to revise stablecoin rules under the Markets in Crypto-Assets Regulation, or MiCA. Circle said Thursday that Circle had submitted a response to the European Commission's consultation on reviewing the framework. Circle issues the dollar-pegged USDC and the euro-pegged EURC. Circle presented its recommendations as refinements to a framework that Circle credits with giving Europe an early lead in digital-asset regulation.

Circle argued that MiCA has produced many regulated issuers but has kept the largest global stablecoins outside Europe's regulatory perimeter. Circle said only three of the top 25 stablecoins by market value are MiCA-regulated. Circle urged the Commission to preserve multi-issuance, which allows a globally circulating stablecoin to be co-issued by an EU-authorized entity alongside its foreign-regulated counterpart. Circle warned that restricting multi-issuance would push activity offshore.

MiCA requires e-money token issuers to hold at least 30% of reserves in commercial bank deposits. The requirement rises to 60% for tokens deemed significant. Circle argued that the mandate increases exposure to banking-sector credit risk. Circle supported the European Central Bank's call to replace the mandate with a more flexible liquidity requirement. Circle also asked regulators to remove a 35% cap on exposure to a single sovereign. Circle asked regulators to remove a rule limiting holdings at any one bank, arguing that the rule would force large issuers to spread reserves across dozens of banks.

The EU is preparing a broader MiCA overhaul. The EU is expected to revise the framework in 2027 to better address foreign stablecoin issuers. Europe's crypto firms face pressure during MiCA's transition period. Regulators are pressing platforms such as Binance over compliance.

Circle's push also reflects a wider U.S.-EU contest over stablecoin dominance. U.S. stablecoin issuers are expanding abroad. Washington increasingly presents dollar-pegged tokens as a tool to extend the dollar's global reach.