Circle Urges EU to Rework MiCA Stablecoin Reserve Requirements
RWA Signal Insight
StablecoinsCircle has submitted a formal response to the European Commission regarding the review of the Markets in Crypto-Assets Regulation (MiCA), advocating for significant structural adjustments to stablecoin reserve requirements. As a major issuer of USDC and EURC, Circle argues that current mandates, such as the 30% to 60% commercial bank deposit requirement, unnecessarily increase credit and counterparty risks. The company specifically calls for the removal of concentration caps, including the 35% limit on single-sovereign exposure and the 1.5% cap on bank assets per counterparty, which it claims hinder the ability to hold high-quality liquid assets. Furthermore, Circle emphasizes the importance of preserving 'multi-issuance' structures to maintain global liquidity while proposing a new equivalence regime for foreign-regulated stablecoins. These recommendations aim to align EU regulations with international standards while preventing the migration of users to offshore, unregulated platforms. The submission highlights that only three of the top 25 global stablecoins currently comply with MiCA, underscoring the need for a more flexible regulatory environment. This feedback is critical as the European Commission evaluates the framework's impact on the competitiveness of EU-issued e-money tokens on the global stage.
Key points
- Circle proposes replacing rigid bank deposit requirements with flexible minimum asset liquidity standards.
- Current MiCA rules limit single-sovereign exposure to 35%, complicating reserve management for non-EU currencies.
- Only three of the top 25 global stablecoins are currently MiCA-regulated.
- Circle advocates for an equivalence regime modeled after EMIR and the U.S. GENIUS Act.
Background
Circle is a global financial technology firm and the primary issuer of USDC, a dollar-pegged stablecoin designed to maintain a 1:1 value with the U.S. dollar. The company operates under the MiCA framework in the EU, where it issues both USDC and the euro-denominated EURC as authorized e-money tokens. These assets serve as critical bridges between traditional fiat banking systems and blockchain-based digital asset markets.