Circle Seeks to Loosen EU Stablecoin Reserve Rules

Circle has submitted a proposal to the European Commission, seeking changes to the Markets in Crypto-Assets (MiCA) regulation. The company wants to replace the current mandatory bank deposit requirement for e-money tokens with a less rigid liquidity rule.

The current rule requires issuers to keep at least 30% of their reserve assets in commercial bank deposits, with a minimum of 60% for significant e-money tokens. Circle argues that these limits concentrate reserves in the banking system and make it difficult for issuers of non-euro tokens to hold high-quality liquid sovereign assets.

Circle is also seeking to remove the EBA Level 2 cap limiting a reserve's exposure to a single sovereign issuer to 35% and the limit of 1.5% of a bank's total assets for each banking counterparty. The company claims that these changes would increase flexibility for multi-issuance and access for foreign-regulated stablecoins.