Circle Seeks Eased MiCA Rules for Stablecoin Reserves

Circle, the issuer of USDC and EURC, has urged the European Commission to ease MiCA bank deposit rules for stablecoins. The company wants to replace fixed bank deposit requirements with liquidity requirements, aligning with a proposal from the European Central Bank. This change would allow regulators to focus on the liquidity of assets backing a stablecoin instead of requiring issuers to place a fixed percentage of reserves with banks.

Circle's proposal comes after its own experience with banking risk. In March 2023, USDC temporarily lost its dollar peg after Circle disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank when the lender failed. US authorities later protected the bank's depositors and the funds became available to Circle.

Circle also wants to preserve multi issuance, where an EU authorized entity and a regulated entity outside the bloc can jointly issue the same stablecoin. This model allows a global stablecoin to operate through regulated entities in different jurisdictions while maintaining fungibility between tokens.