Circle Seeks EU Stablecoin Rule Changes to Boost Liquidity

Circle, the issuer of stablecoins USDC and EURC, has submitted a proposal to the European Commission's MiCA review consultation. The company wants to replace the mandatory bank deposit requirement for e-money tokens with a less rigid liquidity rule. This could affect how issuers manage their reserves in Europe.

Circle argues that the current rules concentrate reserves in the banking system and limit the flexibility of issuers. It also wants to remove the EBA Level 2 cap limiting reserve exposure to a single sovereign issuer to 35% and the separate limit of 1.5% of a bank's total assets for each banking counterparty.

The company believes that these changes would allow for more liquid reserve choices, greater flexibility for multi-issuance, and access for foreign-regulated stablecoins in Europe. However, it does not provide details on how these changes would affect redemption terms for USDC, EURC, or USDT.