Circle Challenges EU Stablecoin Reserve Rules

Circle, the issuer of the stablecoin USDC, has submitted its response to the European Commission's MiCA regulation review. The company argues that the current reserve requirements are too restrictive and could increase exposure to credit and counterparty risk within the banking sector.

MiCA requires issuers to maintain at least 30% of their reserve assets in commercial bank deposits, a threshold that rises to 60% for significant issuers. Circle agrees with the European Central Bank that this requirement should be replaced by a less rigid liquid asset requirement.

The company also proposes an equivalence and recognition regime for stablecoins regulated outside the EU, based on existing frameworks such as EMIR, CSDR, and MiFIR, and on the U.S. equivalent regime under the GENIUS Act.