Circle Seeks EU Stablecoin Rule Changes to Reduce Risk Exposure
Circle, the issuer of USDC and EURC, has called for changes to the European Union's Markets in Crypto-Assets Regulation (MiCA) during its review process. The company argues that MiCA's reserve rules create unnecessary exposure to bank-sector credit and counterparty risk.
In a response submitted to a consultation on whether MiCA remains fit for purpose, Circle proposed shifting from fixed deposit minimums toward a more flexible 'minimum asset liquidity' standard. This approach would align with the European Central Bank's thinking, ensuring stablecoin redemptions can be met under stress.
Circle also recommended removing reserve concentration limits, including caps tied to single sovereign exposure and deposits with each counterparty. The company pointed to its own experience during the 2023 banking turmoil as an example of how reserve concentration in a single bank can escalate quickly.