Circle Pushes EU to Reconsider Stablecoin Reserve Requirements Under MiCA

Circle, the issuer of popular stablecoins USDC and EURC, has urged the European Commission to revise reserve requirements in its review of the Markets in Crypto-Assets Regulation (MiCA).

In a response to a consultation on reviewing MiCA, Circle argued that mandatory bank-deposit requirements expose stablecoin issuers to banking-sector credit and counterparty risks. This concern was highlighted when USDC temporarily lost its dollar peg in March 2023 after Circle disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank.

Circle is calling for a more flexible minimum asset liquidity requirement, aligning with the European Central Bank's stance on reserve requirements. The company also urged the Commission to remove two reserve concentration limits and preserve 'multi-issuance,' which allows a European Union-authorized entity and a foreign-regulated counterpart to co-issue a stablecoin.

Industry groups such as the Hyperliquid Policy Center and Global Blockchain Business Council have also submitted responses to the consultation, recommending changes to onchain market rules, token classification, and proportionate stablecoin safeguards.