CryptoSlate
Circle is urging the European Union to let qualifying foreign-regulated stablecoin issuers distribute tokens in Europe without full MiCA authorization, and to loosen reserve requirements. The company says only 3 of the world’s 25 largest stablecoins by market value, USDC, USDG and EURC, are currently regulated under MiCA, despite roughly 30 e-money tokens receiving authorization since the rules took effect.
Why it matters
Circle proposes that the European Commission assess whether foreign jurisdictions meet EU standards, with the European Banking Authority then recognizing individual issuers. Those issuers would remain primarily supervised at home and distribute tokens through locally licensed institutions. Circle also wants to preserve multi-issuance, in which an EU-authorized entity co-issues a stablecoin with a foreign-regulated counterpart.
The reserve rules are where Circle and Tether find common ground. MiCA requires e-money token issuers to hold at least 30% of reserves in commercial-bank deposits, rising to 60% for tokens classified as significant. Circle argues that mandatory deposits increase exposure to bank credit and counterparty risk. Tether CEO Paolo Ardoino has raised similar concerns, and said the company declined to seek an EU license because of the requirement. Circle complied with MiCA; Tether kept USDT outside the framework.
Market impact
Circle also wants the EU to remove a 35% cap on exposure to a single sovereign and a limit restricting deposits at one bank to 1.5% of that lender’s assets. It argues those constraints can hinder reliance on high-quality sovereign securities and require large issuers to spread reserves across many banks.
The proposals face competing concerns. The EBA has urged stronger safeguards around third-country multi-issuer structures, warning that reserves and redemptions could sit beyond effective EU supervision. The Commission’s MiCA review consultation closed Sept. 30, and its findings could lead to amendments. Until then, foreign issuers remain subject to the existing framework, leaving any broader market access dependent on EU decisions.
Frequently asked questions
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How would Circle’s proposed recognition system work?
The European Commission would assess whether a foreign jurisdiction’s rules meet EU standards. The EBA would then recognize individual issuers, which would remain primarily supervised in their home countries.
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What reserve deposit requirements does MiCA set for stablecoin issuers?
MiCA requires e-money token issuers to hold at least 30% of reserves in commercial-bank deposits, rising to 60% for tokens classified as significant.
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Why do Circle and Tether object to the bank deposit rules?
Circle argues mandatory deposits increase exposure to bank credit and counterparty risk. Tether CEO Paolo Ardoino has raised similar concerns.
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What other MiCA reserve limits does Circle want changed?
Circle wants the EU to remove a 35% cap on exposure to a single sovereign and a rule limiting deposits with one bank to 1.5% of that lender’s assets.
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Would Circle’s proposal immediately allow foreign stablecoins into Europe?
No. Foreign issuers remain subject to the existing framework while the EU considers its MiCA review. The Commission’s findings could lead to legislative amendments.
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