Circle Seeks Looser Reserve Rules and Multi-Issuance Support in EU Stablecoin Framework

Circle, a prominent player in the stablecoin market, has urged the European Union to revise parts of its Markets in Crypto-Assets (MiCA) regulation. The company argues that the framework, which has helped establish Europe as an early leader in stablecoin regulation, needs targeted changes to attract more global liquidity. Circle claims that the current reserve requirements can increase exposure to bank credit and counterparty risks.

The company is pushing for changes to MiCA's reserve rules, including replacing the current 30% and 60% reserve asset requirements with a less rigid minimum liquidity requirement. Circle also wants regulators to remove a 35% concentration limit on exposure to a single sovereign and a rule limiting deposits with an individual bank to 1.5% of that bank's total assets.

Circle is also advocating for the preservation of multi-issuance, a model in which the same globally circulating stablecoin can be issued by both a MiCA-authorized EU entity and a separately regulated entity outside the bloc. The company argues that restricting this model could push European users toward offshore stablecoins outside MiCA's protections.

Circle has proposed formalizing safeguards around multi-issuance, including mechanisms for dynamically rebalancing reserves between EU and global entities. The company 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.