Circle Seeks EU Reconsideration of Stablecoin Reserve Rules

Circle is urging the European Commission to reconsider its Markets in Crypto Assets (MiCA) regulation, specifically the bank deposit requirements for stablecoin issuers. The USDC issuer argues that requiring stablecoin issuers to hold at least 30% of their reserves in commercial bank deposits exposes them to banking risks.

Circle's proposal suggests replacing fixed deposit thresholds with liquidity requirements based on how quickly reserve assets can be accessed for redemptions, similar to a model proposed by the European Central Bank and EU national central banks. The company points to its own experience during the Silicon Valley Bank collapse, when $3.3 billion of USDC reserves became caught up in the crisis.

Circle also wants to preserve 'multi issuance' arrangements that allow regulated entities inside and outside the EU to jointly issue the same stablecoin. This, it argues, would maintain fungibility between tokens and prevent European users from being pushed towards offshore stablecoin providers operating outside MiCA's protections.