Circle Pushes EU to Revise Stablecoin Reserve Rules in MiCA Review

Circle, the issuer of USDC and EURC stablecoins, has urged the European Commission to revise reserve requirements for e-money token issuers in its review of the Markets in Crypto-Assets Regulation (MiCA). The company's response to a consultation on reviewing MiCA highlighted concerns over mandatory bank-deposit requirements that expose stablecoin issuers to banking-sector credit and counterparty risks.

In March 2023, Circle faced these risks firsthand when USDC temporarily lost its dollar peg after the company disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank. The funds were subsequently made available after US authorities protected the bank's depositors.

Circle backed reconsidering mandatory deposit minimums and replacing them with a more flexible minimum asset liquidity requirement, aligning with the European Central Bank's views on reserve requirements.