Stablecoin giants urge EU to revise MiCA

TLDR

Circle and Tether are lobbying the European Union to soften MiCA's strict bank-deposit rules and recognition of foreign stablecoin issuers, aiming to keep major tokens viable in Europe.

1. Circle and Tether want MiCA to reduce mandatory bank deposits, ease limits on sovereign and bank exposure, and formally recognize non-EU regulated issuers via multi-issuer structures.
2. If rules stay unchanged, major stablecoins may restrict EU operations or avoid licensing, shifting users toward smaller MiCA tokens or offshore venues and fragmenting liquidity across Europe.
3. Next steps include the European Commissions MiCA review, ESMA and ESRB recommendations, and how issuers like USDC and USDT adjust reserves and EU access while talks continue.

Deep Dive

1. What Stablecoin Issuers Want Changed

Circle and Tether, the two largest dollar stablecoin issuers, have jointly raised concerns that MiCAs requirement for significant tokens to hold large portions of reserves in bank deposits concentrates risk in a few institutions. A CoinsKid community explainer notes they are urging changes to MiCAs bank-focused reserve rules so more reserves can sit in government bonds and other low-risk assets rather than commercial deposits, which could fail or be ring-fenced in a crisis.

Circles separate submission to the European Commission asks MiCA to recognize qualifying foreign-regulated issuers and allow multi-issuance, where an EU entity co-issues a globally circulating stablecoin with a non-EU partner, instead of demanding full fresh EU authorization for every major token.Circle is urging the EU to amend MiCA to loosen these reserve rules and remove tight caps on exposure to a single sovereign or bank.

2. Why It Matters For Stablecoin Markets

Currently, only a small fraction of the worlds largest stablecoins fall fully under MiCA, despite dozens of smaller e-money tokens receiving authorization. That gap reflects how hard the bank-deposit and diversification rules are to satisfy at global scale, making it difficult for giants like USDT and USDC to operate in Europe under their usual reserve structures.

Circle argues that forcing more reserves into bank deposits introduces credit and counterparty risk and may push users toward offshore tokens that sit outside MiCA protections, while Tether has cited similar concerns when declining to seek an EU license. Exchanges are already adapting; one example highlighted is OKX opening a USDT to USDC conversion route in Europe as MiCA rules tightened, a sign that trading venues are preparing for possible changes in which stablecoins they can offer under EU law.

3. Regulatory Review And What To Watch

MiCA itself is in a formal review phase. ESMA has published guidelines implementing the current reserve rules and supervisory approach, while the European Systemic Risk Board has urged caution on multi-issuer schemes, warning that cross-border reserve transfers and redemptions may escape effective EU oversight. Any significant change will require the European Commission to adjust MiCA or adopt a tailored framework.

The immediate outcome is uncertain. Regulators may keep the rules, modestly tweak them to widen acceptable reserve assets, or create an equivalence route for foreign-regulated issuers. In parallel, issuers like Circle and Tether must decide whether to restructure reserves for Europe, ring-fence EU tokens, or limit their footprint if the regime remains strict.

Confidence: high, based on recent regulatory coverage and issuer submissions from early October 2026.

Conclusion

The push by Circle and Tether to revise MiCA is a direct clash between Europes bank-centric prudential model and the way global stablecoins are actually reserved and issued. If regulators offer flexibility, Europe could retain access to the biggest dollar tokens within a clear, supervised framework. If they hold the line, expect more fragmented liquidity, different stablecoin menus across venues, and a larger role for smaller, fully MiCA-compliant tokens in EU crypto markets.