Circle Pushes EU Regulators to Rethink Stablecoin Reserve Rules

Circle has submitted comments to the European Commission on the Markets in Crypto-Assets Regulation (MiCA) framework for stablecoin reserve rules. The company argues that rigid requirements tied to bank deposits can expose issuers and token holders to banking-sector credit and counterparty risk.

The submission highlights Circle's experience with the 2023 USDC ($1.00 · Live) dollar peg disruption, which occurred after it disclosed $3.3 billion in USDC reserves were held at Silicon Valley Bank. The funds were later made available after US authorities protected depositors and enabled USDC to recover its peg.

Circle supports replacing fixed deposit minimums with a more flexible liquidity/asset-based requirement aligned with central bank thinking. It also suggests removing reserve concentration limits that can restrict portfolio flexibility without improving real-world safety.