CryptoSlate
The European Banking Authority has designated Circle Internet Financial Europe SAS's USDC as the EU's first significant e-money token under MiCA, among 45 notified e-money tokens. From Nov. 12, the EBA takes direct responsibility for supervising the issuer's capital, reserve assets, liquidity requirements and recovery and redemption plans. France's ACPR retains governance and several other supervisory duties.
Why it matters
The designation moves oversight of key financial safeguards for EU-issued USDC to the EBA, while leaving national supervision in place for other parts of the issuer's operations. The two authorities will cooperate on the handover. The EBA has also signed a memorandum with the New York State Department of Financial Services to support cooperation and information exchange on stablecoin activities.
The change comes as Circle presses for revisions to MiCA's reserve framework. In an Oct. 1 consultation response, the company argued that mandatory bank-deposit requirements can expose issuers to bank credit and counterparty risk. It proposed replacing minimum deposits with a more flexible liquidity requirement and called for changes to limits on sovereign and banking-counterparty exposure. Those proposals are part of a separate policy debate, not a change announced with the supervisory handover.
Market impact
MiCA's existing baseline requires credit institutions to keep at least 30% of funds received for e-money tokens in separate accounts, with the remainder invested in specified secure, low-risk, highly liquid instruments denominated in the referenced currency. Circle described the deposit floor as 30% of reserve assets for e-money token issuers and 60% for significant-token issuers.
Circle identifies separate EU and US issuers for USDC. Its white paper says the European entity holds reserves for European Economic Area holders and the US entity for non-EEA holders, although the tokens are fungible. A global USDC circulation figure therefore does not describe the EU issuer's reserve portfolio.
Frequently asked questions
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Which USDC responsibilities move to the EBA on Nov. 12?
The EBA will directly supervise the EU issuer's capital, reserve assets, liquidity requirements, and recovery and redemption plans.
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What duties will France's ACPR retain?
The ACPR retains governance supervision, along with oversight of qualifying holdings, fit-and-proper assessments, outsourcing, and conflicts of interest.
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What reserve-rule changes has Circle proposed?
Circle has proposed replacing mandatory minimum bank deposits with a more flexible minimum asset-liquidity requirement and changing limits on sovereign and banking-counterparty exposure.
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Why does global USDC circulation not show the EU issuer's reserves?
Circle says its European entity holds reserves for European Economic Area holders, while its US entity holds reserves for non-EEA holders. The tokens are fungible, but the reserve portfolios are separate.
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Does the EBA designation guarantee USDC's peg or change redemptions?
No. The designation adds no peg guarantee or insurance and does not automatically change redemption terms or require holders to move funds.
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