Circle Seeks Stablecoin Reserve Rule Revisions in EU MiCA Review

Circle has urged the European Commission to revise reserve requirements for stablecoin issuers in the Markets in Crypto-Assets Regulation (MiCA).

In its response to a consultation on reviewing MiCA, Circle argued that mandatory bank-deposit requirements expose stablecoin issuers to banking-sector credit and counterparty risks.

Circle faced these risks firsthand when USDC temporarily lost its dollar peg after the company disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank in March 2023.

The funds were subsequently made available after US authorities protected the bank's depositors.

Circle called for replacing mandatory deposit minimums with a more flexible minimum asset liquidity requirement, aligning with the European Central Bank's view.