Circle pushes EU to ease stablecoin rules

TLDR

Circle is urging the European Union to soften key MiCA stablecoin rules, especially strict bank deposit requirements and limits on foreign-issued tokens.

1. Circle wants the EU to rethink MiCAs mandatory bank-deposit ratios and preserve a model that lets EU-regulated firms co-issue stablecoins with foreign issuers.
2. If adopted, Circles proposals could reduce banking-risk concentration in reserves and keep major global stablecoins like USDC usable on regulated EU platforms.
3. Nothing has changed yet; the MiCA review, ESMAs tougher proposals, and upcoming EU decisions will determine how easily stablecoins can operate in Europe.

Deep Dive

1. Circles Requested Changes

In its consultation response, Circle asked the European Commission to revise MiCAs treatment of e?money tokens, arguing that current rules are unnecessarily rigid for global stablecoins such as USDC and EURC. In particular, MiCA would require issuers to keep 30% of reserves in commercial bank deposits, rising to 60% for significant tokens, a rule Circle wants replaced with a more flexible minimum liquidity requirement that does not force such heavy reliance on banks balance sheets.

Circle also urged the EU to preserve a multi?issuance model, where a MiCA?licensed institution and a foreign issuer jointly offer the same stablecoin in Europe, and to adopt a recognition regime that lets compliant foreign issuers be supervised primarily in their home country, subject to EU recognition and oversight by the European Banking Authority. According to its consultation response, Circle argues that shutting down these models would push European users toward offshore exchanges outside MiCAs regulatory perimeter.

2. Impact On Stablecoin Markets

Circles push reflects concern that MiCA, combined with proposed ESMA restrictions on non?compliant stablecoins custody and transfer services, could sharply narrow which tokens regulated EU providers can hold or move, even for existing customers. That would directly affect USDC and other large dollar stablecoins that do not yet fully meet MiCA requirements.

By challenging the bank?deposit rule, Circle and some European central bank voices warn that forcing large portions of reserves into commercial banks increases credit and counterparty risk, rather than reducing it. A liquidity?focused standard, in their view, would better match how stablecoins are actually used for trading and payments while still protecting users.

3. What To Watch Next

Circles submission is part of a formal MiCA review process, not a rule change. ESMAs call to extend prohibitions to custody and transfers for non?compliant stablecoins is similarly a policy recommendation, not yet law, as highlighted in recent analysis of ESMAs proposal.

Key next steps are the European Commissions reaction to consultation feedback, any draft amendments to MiCAs stablecoin chapters, and how ESMA and the European Banking Authority interpret their enforcement powers. Markets will be watching whether the EU chooses a more flexible recognition and liquidity regime or doubles down on strict bank?deposit and servicing limits.

Conclusion

Circles lobbying is an attempt to steer MiCA away from rules that could both concentrate banking risk and sideline major global stablecoins from Europes regulated markets. The outcome will shape which stablecoins EU users can rely on, how their reserves are held, and whether activity migrates to offshore venues or remains inside MiCAs supervised perimeter.