Circle urges EU to ease stablecoin rules

TLDR

Circle is lobbying the European Union to soften MiCA stablecoin rules, especially strict bank deposit requirements, arguing they increase risk and could push users to offshore venues.

1. Circle wants MiCA changed so foreign stablecoins like USDC can operate under a recognition regime and without rigid bank deposit quotas.
2. It argues the current rules raise banking credit risk and reduce choice, potentially driving EU users toward less regulated offshore platforms.
3. The European Commissions MiCA review and ESMA proposals will determine whether EU stablecoin rules become more flexible or more restrictive.

Deep Dive

1. What Circle Is Asking For

On 3 Oct 2026, Circle urged the European Commission to revise MiCAs treatment of foreign stablecoins and its bank deposit requirements for issuers, in formal consultation feedback on the regime for e?money tokens and asset?referenced tokens. Circle, which issues USDC and EURC, noted that only three of the 25 largest stablecoins are currently MiCA regulated, two of them its own products, and warned that ending cross?border multi?issuance could push EU users to offshore exchanges outside MiCAs perimeter. It proposed a recognition regime where foreign issuers remain overseen in their home jurisdictions, with EU distribution handled by locally licensed institutions and validated by the European Banking Authority, allowing international stablecoins to keep serving European users while respecting MiCA supervision. It also asked the EU to replace hard bank deposit percentages with a more general minimum liquidity standard for reserve assets.

2. Why The Bank Deposit Rule Is Controversial

MiCA currently requires e?money token issuers to park 30 percent of reserves in commercial banks, rising to 60 percent for significant stablecoins, a rule Circle wants replaced by a flexible liquidity requirement that can include safer instruments like short?term government debt. Circle argues that large mandatory bank deposits increase exposure to banking sector credit and counterparty risk, aligning with European Central Bank critiques that the rule may be too rigid for systemic stablecoins. At the same time, ESMA has proposed extending restrictions so licensed providers could be barred from custody and transfer services for non?compliant stablecoins, not just trading, which would sharply constrain how EU firms can use tokens like USDT and non?MiCA USDC unless they meet full requirements.

3. What To Watch Next

Circles submission arrived as the European Commission closed its targeted MiCA review, with diplomatic signals suggesting openness to recalibrating stablecoin rules in light of global moves such as the U.S. GENIUS Act. Key next steps are whether the Commission endorses a recognition regime for foreign issuers, relaxes or replaces the bank deposit quotas, and how it responds to ESMAs call to extend prohibitions to custody and transfers of non?compliant tokens. Any shift that reduces rigid bank exposure while keeping broad access to major stablecoins would make EU markets more competitive and safer, while a stricter interpretation could push more volume to non?EU venues and on?chain protocols outside MiCAs reach.

Conclusion

Circles push to ease EU stablecoin rules highlights a growing tension between prudential safeguards and keeping global stablecoin networks usable inside MiCA. If the EU moderates bank deposit mandates and adopts a pragmatic recognition regime, it could support safer, more diversified reserves without forcing activity offshore. If it instead doubles down on strict quotas and broad service bans for non?compliant tokens, stablecoin usage in the EU may fragment, with more risk and innovation migrating to less regulated jurisdictions and on?chain channels.