Circle Seeks EU Stablecoin Regulation Overhaul

Circle, the issuer of the USDC stablecoin, is pushing for changes to the EU's Markets in Crypto-Assets Regulation (MiCA) ahead of the expected 2027 review. The company argues that the current rules governing stablecoin reserves and banking relationships are too restrictive and do not reflect the evolving nature of the digital-asset market.

Circle is specifically seeking changes to the requirement for e-money token issuers to maintain a portion of their reserves in commercial bank deposits. The company agrees with the European Central Bank's view that the mandatory deposit requirement should be reconsidered, and instead proposes a more flexible minimum liquidity requirement.

The company also wants to remove a 1.5%-of-total-bank-assets cap per banking counterparty and a 35% cap on exposure to a single sovereign. Circle says these restrictions make it difficult for issuers of non-euro stablecoins to hold reserves primarily in highly liquid sovereign assets.

Circle's proposals come as the company maintains MiCA-compliant versions of its stablecoins in Europe. The European Commission's review of MiCA is expected to address how the framework applies as the digital-asset market develops, and Circle plans to continue engaging with European policymakers and regulators as the review progresses.