Circle Challenges MiCA Reserve Mandate for Stablecoins

Circle, the issuer of USDC and EURC stablecoins, has pushed back against parts of the European Union's Markets in Crypto-Assets Regulation (MiCA). In a submission to the European Commission's consultation on reviewing MiCA, Circle argued that current rules are keeping large global tokens out of Europe's regulatory perimeter.

The company framed its recommendations as refinements to a framework it credits with giving Europe an early lead. However, it noted that only three of the top 25 stablecoins by market value are MiCA-regulated. To close this gap, Circle urged the Commission to preserve 'multi-issuance', which allows for globally circulating stablecoins to be co-issued by EU-authorized entities alongside their foreign-regulated counterparts.

Circle also made pointed requests concerning reserves. It argued that the current mandate requiring issuers to hold at least 30% of reserves in commercial bank deposits increases exposure to banking-sector credit risk. Instead, Circle sided with the European Central Bank in calling for a more flexible liquidity requirement.