Circle, the issuer of the USDC and EURC stablecoins, has asked the European Commission to replace MiCA’s mandatory bank-deposit allocations with a requirement based on liquidity. The company set out its request in a 1 October summary of its response to the consultation on reviewing the rules.
MiCA, the EU’s Markets in Crypto-Assets Regulation, requires reserve deposits of 30% for ordinary e-money tokens and 60% for tokens classified as significant. For ordinary tokens, at least 30% of funds received must sit in separate bank accounts, while the rest must be held in secure, low-risk and highly liquid assets denominated in the token’s currency.
Circle says the deposit minimums bring more bank credit and counterparty risk into stablecoin reserves. The company’s position is that liquidity, rather than a prescribed allocation to bank deposits, should be the test.
The company also wants the European Banking Authority to remove its 35% limit on exposure to a single sovereign and a limit on deposits with one bank of 1.5% of that bank’s total assets.
Circle says those limits restrict dollar-denominated sovereign reserves and require bigger issuers to divide deposits among dozens of banks. The European System of Central Banks made a similar call in its September response, urging the removal of fixed deposit minimums.
Circle also wants to retain multi-issuance, a structure in which an EU-authorised entity and a foreign-regulated counterpart issue the same stablecoin for global circulation. It argues that tighter limits on that arrangement would send users towards offshore providers beyond MiCA’s protections.
The company says only three of the top 25 stablecoins by market value are regulated under MiCA.
Circle’s argument against bank concentration has its own recent reminder. In March 2023, USDC temporarily lost its dollar peg after Circle disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank.
Central banks have warned of the reverse pressure too: a run on a stablecoin could lead an issuer to pull deposits rapidly, passing stress on to its banks. MiCA requires issuers to redeem tokens at par on request, without a fee except under recovery-plan provisions.
Brussels is expected to revise the MiCA framework in 2027, with the EU review intended to better address foreign stablecoin issuers.
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