Circle urges EU to revise MiCA stablecoin rules to capture global tokens
Quick Look
Circle has called on the European Commission to revise parts of the Markets in Crypto-Assets Regulation (MiCA), arguing that current rules on stablecoin reserves and issuance structure prevent major global tokens like USDT from being regulated in the EU and risk pushing activity offshore.
AI-generated summary
Why It Matters
The Markets in Crypto-Assets Regulation (MiCA) is the EU's comprehensive framework for digital assets, aiming to provide legal clarity and consumer protection. Circle, issuer of USDC and EURC, acknowledges MiCA's role in giving Europe an early lead in crypto regulation but argues it fails to capture the largest global stablecoins.
Circle is pushing the European Union to rework parts of its crypto rulebook, arguing that the current rules governing stablecoins are keeping the world's biggest tokens outside Europe's regulatory perimeter.
The stablecoin issuer said Thursday it had submitted a response to the European Commission's consultation on reviewing the Markets in Crypto-Assets Regulation, or MiCA, the bloc's comprehensive framework for digital assets.
Circle, which issues the dollar-pegged USDC and the euro-pegged EURC, framed its recommendations as refinements to a framework it credits with giving Europe an early lead.
The company's core argument is that MiCA has produced plenty of regulated issuers but failed to capture the largest global tokens. Of the top 25 stablecoins by market value, Circle noted, only three are MiCA-regulated.
To close that gap, it urged the Commission to preserve "multi-issuance," the structure that lets a globally circulating stablecoin be co-issued by an EU-authorized entity alongside its foreign-regulated counterpart, warning that restricting it would simply push activity offshore.
Circle's most pointed concerns concern reserves. MiCA currently requires e-money token issuers to hold at least 30% of reserves in commercial bank deposits, rising to 60% for tokens deemed "significant."
Circle argued that the mandate actually increases exposure to banking-sector credit risk, and sided with the European Central Bank in calling for it to be replaced with a more flexible liquidity requirement. The firm also asked regulators to scrap a 35% cap on single-sovereign exposure and a rule limiting how much it can hold at any one bank, which it said would force large issuers to spread reserves across dozens of banks.
The submission lands as the EU prepares a broader MiCA overhaul. Brussels is expected to revise the framework in 2027 to better address foreign stablecoin issuers, even as European crypto firms navigate the squeeze of MiCA's transition period and regulators press platforms like Binance over compliance.
What to Watch
AI outlook — possibilities, not facts
The European Commission will consider revising MiCA's reserve requirements for stablecoin issuers in its upcoming framework overhaul
Likely · Within months
Multi-issuance structures for stablecoins will be preserved in the revised MiCA framework to prevent offshore shifting of crypto activity
Possible · Within months
Open Questions
- Will the European Commission accept Circle's proposed changes to reserve requirements and multi-issuance rules?
- How might revisions to MiCA affect other major stablecoin issuers like Tether?
- What timeline is expected for the 2027 MiCA overhaul, and what specific changes are under consideration?
