Circle pushes EU to ease stablecoin reserves

TLDR

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

1. Circle wants a lighter EU regime for foreign dollar stablecoins and to keep the current "multi-issuance" model that lets local EU entities co-issue tokens with foreign issuers.
2. It specifically urges the EU to scrap MiCA rules that force e-money stablecoin issuers to park 30 to 60 percent of reserves in commercial banks, citing added credit and counterparty risk.
3. Any change would come through the EU review of MiCA, and could reshape which stablecoins remain usable in Europe and how issuers manage reserves globally.

Deep Dive

1. What Circle Is Asking For

On 3 Oct 2026, Circle submitted feedback to the European Commission's MiCA review, pushing for changes to how the EU treats foreign stablecoins such as USDC and EURC, which Circle issues with over $74 billion combined capitalization globally.

Circle backs continued "multi-issuance," where a MiCA-regulated EU institution and a foreign issuer jointly support one international stablecoin, warning that ending this model could push European users toward offshore exchanges outside MiCA's regulatory perimeter.

It proposes a "recognition regime" where foreign issuers are supervised in their home jurisdictions, subject to an equivalence assessment by the EU and the European Banking Authority, while EU-licensed entities handle distribution locally, as described in Circle's consultation response.

2. Why Bank Deposit Rules Are The Target

MiCA currently requires e-money token issuers to hold 30 percent of reserves in commercial bank deposits, rising to 60 percent for "significant" tokens. Circle argues that these thresholds concentrate exposure to bank failure and credit risk rather than reducing systemic risk.

Circle also notes that high mandatory bank deposits reduce flexibility to hold short term government securities like Treasuries, which many large stablecoins already use to back their tokens, and aligns with European Central Bank comments that this rule should be reconsidered.

3. What Could Change For EU Stablecoins

The European Commission has just closed its MiCA feedback window, and reports suggest it is open to adjusting stablecoin rules in light of global moves such as the new US GENIUS Act, which formalizes US payment stablecoin oversight.

At the same time, ESMA has separately proposed extending restrictions on non compliant stablecoins to custody and transfers, potentially tightening access to unregulated tokens if that proposal is adopted, according to ESMA's submission.

Taken together, the EU could end up with a sharper distinction between fully compliant, bank supervised stablecoins that remain widely usable, and others that face reduced trading, custody and transfer support in regulated venues.

Conclusion

Circle's push is about reshaping how risk is managed in European stablecoin reserves, away from rigid bank deposit quotas and toward broader liquidity standards.

For crypto users in Europe, the key is whether MiCA evolves to keep major regulated stablecoins accessible while tightening rules on less compliant tokens, since that will drive where liquidity, payments and DeFi activity concentrate in the region.