TLDR
Circle is asking the European Union to soften MiCA stablecoin rules that it says are too bank-like and could push stablecoin activity outside the EUs regulatory perimeter.
- Circle wants the EU to relax strict bank-deposit requirements and preserve a shared issuance model for international stablecoins under MiCA.
- It argues current rules increase banking risk, shrink choice, and may drive EU users toward offshore platforms instead of regulated euro-area issuers.
- The consultation is closed but officials appear open to revisions, so EU stablecoin rules could still shift before the regime fully settles.
Deep Dive
1. What Circle Is Asking The EU To Change
On 3 Oct 2026, Circle urged the European Commission to revise MiCAs stablecoin framework in a formal consultation response. It focused on foreign-issued stablecoins and how reserves must be held.
Circle highlighted that only three of the 25 largest stablecoins are currently MiCA-regulated and that it issues two of them, USDC and EURC. It asked the EU to preserve a "multi-issuance" model, where an EU-licensed entity and an offshore issuer co-issue the same global stablecoin, warning that banning this structure could push users to unregulated venues.
Crucially, Circle wants MiCAs requirement that e-money token issuers park 30 percent of reserves in commercial bank deposits, rising to 60 percent for "significant" tokens, replaced with a more flexible "minimum liquidity" standard that does not hardwire such large bank exposures. The company argues this rule makes stablecoins more exposed to bank credit and counterparty risk rather than safer reserves in high-quality short-term assets.
Circle is not trying to avoid regulation entirely; it is trying to reshape MiCA so global stablecoins can operate in the EU without being treated like partial bank balance sheets.
2. Why This Matters For Stablecoins And EU Crypto Users
Circles submission says rigid bank-deposit quotas could make MiCA-regulated tokens structurally less competitive than offshore stablecoins that can hold more in Treasuries or similar assets. That could limit liquidity and utility of EU-compliant USDC and EURC pairs on local exchanges.
Patrick Hansen, Circles EU policy lead, warned that if co-issuance and recognition of foreign issuers are restricted, Europeans may simply migrate to offshore platforms and non-compliant stablecoins, undermining MiCAs goal of bringing activity inside a supervised perimeter. In other words, rules that are too tight risk shrinking the regulated market while leaving the global, less-regulated market intact.
For EU users and venues, the balance between safety and competitiveness will determine whether the "MiCA version" of major stablecoins becomes the default, or whether liquidity clusters in non-EU structures instead.
3. What To Watch Next In The EU Rule Process
The consultation that Circle responded to has closed, and reporting indicates the Commission is at least open to adjusting stablecoin rules as it digests feedback and watches other jurisdictions, including new U.S. legislation.
Two pivot points matter from here:
- Whether the EU softens or retools the bank-deposit quotas into more generic liquidity standards.
- Whether it adopts a "recognition regime" for foreign issuers, where primary supervision happens in their home country with EU oversight over distribution.
If the EU accepts parts of Circles proposal, MiCA could become a more global-friendly framework that still enforces strong consumer protections. If it does not, some large issuers might limit their MiCA-compliant footprint, and EU-facing platforms may lean more on euro stablecoins or alternative structures.
Conclusion
Circles push highlights a core tension in stablecoin policy: regulators want bank-like safeguards, but issuers say those safeguards can themselves create risk and drive users offshore. How the EU tweaks MiCA around bank deposits and foreign issuer recognition will shape whether regulated stablecoins gain share in Europe or whether most real liquidity stays in less-regulated markets.
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