Circle urges EU to revise stablecoin reserve rules in MiCA review
Stablecoin issuer Circle has called on the European Commission to reconsider reserve requirements as part of the ongoing review of the Markets in Crypto-Assets Regulation (MiCA). Highlighting risks related to mandatory bank deposits for reserves, Circle referenced its own experience during a banking crisis that impacted USDC's dollar peg. Feedback from this consultation will inform future regulatory adjustments for Europe's crypto markets.
Risks of Mandatory Bank Deposits for Stablecoins
Circle, the issuer of USDC and EURC, criticized MiCA’s current requirement for stablecoin reserves to be held in commercial bank deposits. The company pointed out that these rules expose issuers to significant credit and counterparty risks from the banking sector.
As an example, Circle cited the March 2023 incident when USDC briefly lost its dollar peg after it was revealed that $3.3 billion of its reserves were held at Silicon Valley Bank. The funds were later secured and made available following intervention by U.S. authorities to protect the bank's depositors.
Circle’s Proposed Changes to MiCA
Currently, MiCA requires e-money token issuers to keep at least 30% of reserves in bank deposits, with a higher minimum of 60% for significant issuers. Circle supports revising these mandatory minimums in favor of more flexible asset liquidity requirements, aligning with the European Central Bank’s position.
The company also advocates removing two reserve concentration limits: a 35% cap on exposure to a single sovereign and a 1.5% cap on deposits held with any single banking counterparty relative to that bank’s total assets.
Circle additionally urged maintaining the “multi-issuance” model, under which an EU-authorized entity co-issues stablecoins with a foreign regulated partner. The firm warned that restricting this structure would push users towards offshore providers outside of MiCA’s regulatory protections.
Industry Stakeholders Call for Adjusted Regulations
Other participants contributed to the consultation as well. The Hyperliquid Policy Center recommended that crypto perpetual futures be regulated under the existing EU securities and derivatives framework, MiFID II, with tailored requirements fitting the market structure and using public blockchain records for transparency and recordkeeping.
The Global Blockchain Business Council (GBBC) called for clearer token classification, proportionate stablecoin safeguards, and reduced overlap between MiCA and payment services regulations.
GBBC also emphasized the need for clear redemption responsibilities, enforceable reserve rebalancing, and accountable supervisory frameworks within the EU for cross-border stablecoin issuance.
Why it matters
Circle’s recent input to the European Commission is part of a larger conversation about how to evolve crypto-asset regulation for a maturing market. The company’s experience with Silicon Valley Bank highlights tangible risks attached to the current rigid deposit requirements. Revising MiCA rules could foster more flexible and safer stablecoin reserve structures, reducing systemic banking risks and discouraging users from turning to providers outside EU regulatory reach. Additionally, feedback from industry groups underscores the need for an integrated approach toward regulating both stablecoins and blockchain-based derivatives, critical for the competitiveness and transparency of Europe’s crypto ecosystem.
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