Circle Seeks EU Revisions to Attract Global Stablecoin Activity

Circle, the company behind the popular USDC stablecoin, is urging the European Union to revise its stablecoin framework, known as MiCA. The framework has helped establish Europe as a leader in stablecoin regulation, but Circle argues that it needs targeted changes to attract more global liquidity.

Circle points out that only three of the world's 25 largest stablecoins by market capitalization, USDC, USDG, and EURC, currently operate under the MiCA framework. To attract more global stablecoin activity, Circle is pushing for the preservation of multi-issuance, a model where the same globally circulating stablecoin can be issued by both a MiCA-authorized EU entity and a separately regulated entity outside the bloc.

Circle also wants the EU to establish an equivalence and recognition regime for foreign stablecoin issuers, similar to arrangements already used in other areas of European financial regulation. This would allow foreign issuers to operate in the EU, subject to equivalent regulatory standards.

Furthermore, Circle is arguing for changes to MiCA's reserve rules, which currently require certain e-money token issuers to keep at least 30% of reserve assets in bank deposits, rising to 60% for significant tokens. Circle believes that these requirements can increase exposure to bank credit and counterparty risks and should be replaced by a less rigid minimum liquidity requirement.